why MBS is more senstive to yield curve trade,? as I know, there duration is smaller than bullet regardless rate go up or down,
read the Schweser explanation. I took that exam today too.
negative convexity is the key. Goes up less on rate decreases and down less on increases. Schweser is ambiguous when it comes to answering these questions.
why it is more senstive, I read the explanation but can’t pursuade my self.
ha ha - me neither. Hence why I don’t like schweser - even though I got the question right. It’s kind of a BS question. It sounds like you have the logic right, which is really the important factor. CFAI administors the exam, not Schweser. You’re good.