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Convexity
(redirected from convexities)

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Convexity
Property that a curve is above a straight line connecting two end points. If the curve falls below the straight line, it is called concave.

Convexity
Describing a curve segment whose ends fall above an arbitrarily set straight line. Convex properties are important to charting; for example, when tracking a stock market's performance, a rise in the chart with respect to the previous day's close followed by a correction going down to but not necessarily meeting that close may be described as a convex curve. See also: Concave.

convexity
A mathematical measure of the sensitivity of a bond's price to changing interest rates. A high convexity indicates a greater responsiveness of a bond's price to interest rate changes.


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D represents a large distance between a tangent line drawn to a pair of convexities from which an opening of the concavity is defined and a bottom of the concavity measured in a direction at right angles to the tangent line.
Thus, if durations are matched and convexities are not, the portfolio prices are hedged only to small changes in the term structure.
 
 
 
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