Glossary Terms > Convexity > What is convexity?
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A measure of the price sensitivity of a fixed income security to changes in interest rates. “Convexity” refers to the shape of the price curve when graphed against theoretical interest rate points. Convexity is influenced by such factors as the coupon rate, maturity and any calls that may or may not exist. Prices rise at increasing rates as yields fall and prices decline at decreasing rates as yields rise.
Last updated on May 14, 2009 by Jack Parsons
