Your question is Duration and Convexity. Take a moment with it on the right.
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Explain the concept of duration and convexity and how they relate to bond price sensitivity.
Define Macaulay duration, modified duration, and convexity, then explain how each measure is used to estimate a bond’s price change when yields move. Use a simple numerical illustration to show the duration-only estimate, the convexity adjustment, and why the relationship is asymmetric for yield increases and decreases.