Convexity

Bond ConvexityBond Convexity: Measures the rate of change in a bond’s duration as yields move, acting as a secondary risk gauge that explains price movements that duration alone cannot predict. More: Measures the rate of change in a bond’s durationBond Duration: Estimates the percentage change in a bond’s price for every 1% shift in interest rates. For example, a bond with a 3-year duration will gain or lose roughly ±3% of its value if rates fall or rise by 1%. More as yields move, acting as a secondary risk gauge that explains price movements that durationBond Duration: Estimates the percentage change in a bond’s price for every 1% shift in interest rates. For example, a bond with a 3-year duration will gain or lose roughly ±3% of its value if rates fall or rise by 1%. More alone cannot predict.