Duration is the primary measure of interest rate sensitivity — it is the percentage change in price for a 1% change in interest rates. However, practitioners also look at convexity, which is the ...

What Are Duration and Convexity? Duration and convexity are two tools used to manage the risk exposure of fixed-income investments. Duration measures the bond's sensitivity to interest rate changes.

James Chen, CMT is an expert trader, investment adviser, and global market strategist. Thomas J. Brock is a CFA and CPA with more than 20 years of experience in various areas including investing, ...

Callable bonds are a type of bond that the issuer can “call” or redeem before the maturity date. The specifics vary from bond ...

Bond convexity measures price sensitivity to interest rate changes in the secondary market. Positive convexity increases bond value as interest rates fall; negative does the opposite. Understanding ...

When companies and governments issue bonds, they do so with a specific maturity date attached to the bond. For example, a five-year corporate bond will pay interest for five years before it’s ...

One of us had a professor who would say, “When it comes to math, I’m slow, but I’m inaccurate.” That shortcoming can be a problem for understanding convexity in many parts of the fixed income markets, ...