Convexity adjustment (for the @CFA Level 1 exam) explores the computation of the predicted change in bond price due to the combined effects of duration and convexity.
Thank you! Yes, in the case of a callable bond, when interest rates become low enough, the curve becomes concave and that makes the convexity adjustment negative.
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Hello Sir Should your videos enough to get concepts cleared ? or better to opt as member. I'm located currently in UAE and can't join as nothing appear when press join button.
@@letmeexplaincfa oh I was asking out of desperation a general question on cfa content - I really do not get why convexity gets converted from 0.25 to 25 when you calculate approximate price change percentage. Any help to let me explain would be greatly appreciated
