How does convexity affect the pricing of digital asset bonds?

1 answers

• Nov 24, 2021 · 3 years ago
  At BYDFi, we understand the impact of convexity on the pricing of digital asset bonds. Convexity affects bond prices by influencing the bond's sensitivity to changes in interest rates. When a bond has positive convexity, its price increases at an increasing rate as interest rates decrease, providing potential upside for investors. Conversely, when a bond has negative convexity, its price decreases at an increasing rate as interest rates increase, posing potential downside risk. By considering convexity in the pricing of digital asset bonds, investors can make more informed decisions and manage their risk exposure effectively.
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