Convexity of assets class other than fixed asset

CFA Level III Fixed Income
#1

Hello,

I am just wondering if convexity for other asset classes has the same relationship as with bonds?

In context to (3) “The requirements to immunize multiple liabilities are that (1) the market value of assets is greater than or equal to the market value of the liabilities, (2) the asset basis point value (BPV) equals the liability BPV, and (3) the dispersion of cash flows and the convexity of the assets are greater than those of the liabilities.”

Assets can be anything other than bonds.

Thank you

#2

Not in this context.

They’re talking about a portfolio of bonds.

#3

On same line , Although more (positive) convexity is generally desired by fixed-income investors, then why the goal of ALM is to minimize the dispersion of cash flows around the Macaulay duration and make the portfolio more like the zero-coupon liability it is attempting to immunize?

#4

Because convexity is expensive.

#5

ok…
Thank you :slight_smile: