Calculate convexity and duration for more accurate bond price change estimates.
Duration alone underestimates price gains when rates fall and overestimates losses when rates rise. Convexity corrects for this by capturing the curvature of the price-yield relationship. Higher convexity is better — you gain more when rates fall than you lose when they rise.
Duration gives a linear approximation (good for small rate changes). Convexity adds the second-order correction (essential for large rate changes of 100+ bps). Together they provide highly accurate price change estimates.