Bond convexity

Bond convexity is like a measure of how sensitive the price of a bond is to a change in a bond's interest rate. Convexity measures how much the price of a bond changes when the interest rate changes. For example, if the interest rate goes up by 1%, the price of the bond might go up by 2%. If the interest rate goes down 1%, the price of the bond might go down by 3%. So, bond convexity shows how the bond prices change depending on the changes in interest rates.