[Verse 1] Picture a bond that pays you well Company holds the calling bell When interest rates begin to slide They'll yank it back, nowhere to hide Regular bonds climb mountain high But callable ones just wave goodbye [Chorus] Negative convexity, the ceiling's getting low When rates drop down, your gains won't grow Duration starts to flip and sway Unstable as the issuer's way Call protection fades away Negative convexity today [Verse 2] Think of a rocket with a chain Price appreciation feels the strain While normal bonds keep soaring free Yours hits a wall at call decree The company wins when rates decline They'll refinance and leave you behind [Chorus] Negative convexity, the ceiling's getting low When rates drop down, your gains won't grow Duration starts to flip and sway Unstable as the issuer's way Call protection fades away Negative convexity today [Bridge] Lower rates should mean more wealth But callable bonds hurt portfolio health Duration shortens, price gets capped In the call option, you've been trapped Asymmetric risk unfolds When the issuer controls what they sold [Verse 3] Graph it out, the curve bends back Convexity turns from white to black Premium shrinks as call date nears Reinvestment risk appears What seemed sweet becomes quite sour When the company holds the power [Chorus] Negative convexity, the ceiling's getting low When rates drop down, your gains won't grow Duration starts to flip and sway Unstable as the issuer's way Call protection fades away Negative convexity today [Outro] Remember when you see that call Price upside hits a wall Negative convexity Caps your opportunity
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