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.

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 ...

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, ...

Callable bonds are a type of bond that the issuer can “call” or redeem before the maturity date. The specifics vary from bond to bond, but callable bonds always have one thing in common — the issuer ...

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 ...