Bond convexity measures the relationship between bond value and interest rates. In order to highlight a bond holder's risk exposure, it is used to analyze the impact of an increase or fall in interest rates. As a bond's yield changes, its term changes as well. Convexity measures the sensitivity of a bond to yield fluctuations. Duration is an imprecise way to measure a bond's price change since it implies that it is linear when, in reality, it has a sloping, or "convex" shape. Bonds with positive convexity have durations that increase as yields decrease.

Bond convexity is the measure of how price changes in response to interest rate changes. A bond with positive convexity responds to an increase in interest rates by increasing its price, while a bond with negative convexity responds to an increase in interest rates by decreasing its price. Bond convexity is typically calculated using the difference between the spot price and its forward price.

Bond convexity is the degree to which the price of a bond changes when interest rates change. Bond convexity can be positive or negative, depending on how much the bond's price moves with changes in interest rates. This measure is used to forecast the risk of fixed income securities and to understand how changes in interest rates will impact an investor's portfolio.