问题
单项选择题
The distinction between modified convexity and effective convexity is that:（）
A. effective convexity accounts for changes in cash flows due to embedded options, while modified convexity does not.
B. modified convexity becomes less accurate as the change in yield increases, but effective convexity corrects for this.
C. modified convexity is only meaningful for positive changes in yield, while effective convexity can be used for either positive or negative changes in yield.
答案
参考答案：A
解析：
Effective convexity is the appropriate measure to use for bonds with embedded options because it takes into account the effect of the embedded options on the bond’s cash flows.