Convexity is a measure of how the price of a bond changes in relation to changes in interest rates. It is an important concept for bond investors to understand, as it can help them to make informed decisions about which bonds to buy and sell.
There are a number of different ways to check the convexity of a bond. One common method is to use a bond pricing model. These models take into account a number of factors, including the bond’s coupon rate, maturity date, and current market interest rates, to calculate the bond’s price. By comparing the bond’s price under different interest rate scenarios, investors can get a sense of the bond’s convexity.
