Convexity: ActEd notes page 29

Discussion in 'CM1' started by Mazvita Ndawana, Dec 2, 2020.

  1. On page 29 of Chapter 13, above the heading Why is it called convexity it reads, "Positive convexity implies that the discounted mean term is a decreasing function of i". Is it correct to follow the same logic then and say that if we have a situation where we have the discounted mean term being an increasing function of i that we have negative convexity?
     
  2. Joe Hook

    Joe Hook ActEd Tutor Staff Member

    Hi Mazvita, that's correct.
     
    Mazvita Ndawana likes this.

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