[Verse 1] When bond prices shift and markets bend Duration tells us where we'll land But curves are sneaky, they ascend In ways that linear minds can't understand A ten percent drop in rates today Duration says we'll gain that much But convexity has more to say About the magic in that touch [Chorus] Convex-ity, the curve's best friend Half times duration squared times change When big moves make the markets bend The second-order rearrange Point-five-D-squared-delta-R That's the formula we need Convex-ity will take us far When estimation's guaranteed [Verse 2] Small changes fool us every time Duration works just fine alone But when the yield swings past that line Of fifty basis points or more unknown The price curve bends like archer's bow Not straight but curved toward the sky That's when convexity will show Its power lifting prices high [Chorus] Convex-ity, the curve's best friend Half times duration squared times change When big moves make the markets bend The second-order rearrange Point-five-D-squared-delta-R That's the formula we need Convex-ity will take us far When estimation's guaranteed [Bridge] Positive always, never negative Bonds love convexity's embrace Prices rise more when rates give And fall less when rates give chase Duration plus convexity Equals precision in your hand Better estimates guarantee Success across the interest land [Verse 3] Calculate that percentage change Add both effects together tight Duration first, then rearrange Convexity makes it right When volatility runs wild And rate swings grow beyond control Convexity keeps estimates styled And accuracy your goal [Chorus] Convex-ity, the curve's best friend Half times duration squared times change When big moves make the markets bend The second-order rearrange Point-five-D-squared-delta-R That's the formula we need Convex-ity will take us far When estimation's guaranteed [Outro] Remember when the moves get large Convexity adjustment calls It's your precision-boosting charge When market chaos enthralls
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