Equal yield moves can produce unequal bond price changes #Bonds #Convexity #BondYields #FixedIncome

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Equal yield changes can produce unequal dollar price changes. Consider a hypothetical default free, noncallable zero coupon bond paying one hundred dollars in three years. Use annual compounding and hold the remaining maturity fixed. At a five percent yield, its price is about eighty six dollars thirty eight cents. At four percent, it is eighty eight dollars

Use this analysis as general education. Confirm current prices and conditions independently, define invalidation before entry, and size every position for the loss you can actually tolerate.