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Charles Schwab said that sitting on cash caused some investors to miss out on greater returns...

Charles Schwab said that sitting on cash caused some investors to miss out on greater returns in bonds. What bond characteristic can be mainly attributed to the additional return bonds earned over a cash money markets?

Higher convexity

Higher duration

Lower convexity

Widening of money market spreads

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Answer #1

Higher convexity

Reason A bond with a higher convexity has lesser risk and is less impacted by fluctuating interest rates.

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