Explanation:
The yield-to-maturity of a corporate bond includes a government benchmark yield and a credit spread. Changes in the bond's yield-to-maturity can arise from either component or a combination of both. For an option-free fixed-rate bond, the same duration and convexity statistics apply to changes in the benchmark yield as well as changes in the credit spread. This makes option C the correct answer, as both components are relevant.
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For an option-free fixed-rate corporate bond, the duration and convexity statistics are most relevant for a change in:
A
Only the credit spread.
B
Only the benchmark yield.
C
Both the credit spread and the benchmark yield.
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