Frankfurter Wertpapierbörse
Convexity is considered positive if a bond’s duration increases when interest rates fall, and negative if it increases when interest rates rise. This means a bond with positive convexity will see its price fall by a smaller rate if rates rise than if they had fallen. Effective convexity is used to measure the change in price resulting from a change in the benchmark yield curve for securities with uncertain cash flows. This is in contrast to approximate convexity, which [...]