convexity Definition
con·vex·ity (kän vek′sə tē, kən-)
noun
- the quality or condition of being convex
- pl. -·ties a convex surface, line, etc.
Etymology: L convexitas
convexity Finance Definition
- For a bond or note, a measure of the way duration and prices change when interest rates change, as represented in the curvature of the price-yield relationship. A bond or note has a positive convexity if the instruments value increases at least as much as duration indicates when rates drop, and decreases less than duration indicates when rates rise. Investors want positive convexity because it makes a bond more valuable after a price change than its duration value suggests.
- For options, a measure of the way the value of the position changes in response to the change in the volatility or price of the underlying instrument. An option with positive convexity holds or increases its value more than delta (the change in the price of the option with respect to a one-dollar change in the price of the underlying asset) would predict when volatility increases or when prices change by a large percentage.
convexity Usage Examples
Adjective modifier
- maximum: The point of maximum convexity is a frequent site of tension fracture, with release of slab avalanches.
- frontal: The current experiment confirms that left frontal convexity is sensitive to manipulations of the direction of visuospatial attention.
- left: The current experiment confirms that left frontal convexity is sensitive to manipulations of the direction of visuospatial attention.
- local: Pass Point that lies on a local convexity that is orthogonal to a local concavity.
Noun used with modifier
Browse dictionary entries near convexity
- ‹ convex
- ‹ convertor
- ‹ convertiplane
- ‹ convertible security
- ‹ convertible preferred stock
- ‹ Convertible Mark
- ‹ convertible exchangeable preferred stock
- ‹ convertible currency
- ‹ convertible bond
- ‹ convertible adjustable-rate mortgage
- convexo-concave ›
- convexo-convex ›
- convexo-plane ›
- convey ›
- conveyance ›
- conveyancing ›
- conveyor ›
- convict ›
- conviction ›
- convictive ›

