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CMS, Convexity Adjustment

iwanttolearnsobad

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8/9/24
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Hello,
Hope everyone is well.

I have a question on CMS and convexity adjustment...
I would really appreciate if anyone could help me out.

1. Why is PV profile of a CMS is linear to market rate (unlike a bond)?

2. Why is CMS's fixed rate higher than that of IRS? - I heard it's due to the convexity adjustment, but I dont get why..

Thanks guys in advance for your time..
 

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