There are 2 formulas for convexity that I know:

1. C = [ BV(2) + BV(1) - 2*BV(0) ] / BV(0) * (delta y)^2

2. C = Summation of ( year number)^2 * Present Value of Cash Flow / Current Bond Value

Now I did a question using both methods and got 2 different answers.

Here is the question: What is the convexity of a 5% 2 year Semi Annual Bond when the market rate is 4.5%.

Soln1: C= 4.56 and Soln2: C = 3.8 (different solutions!)

My complete solutions can be found on the image I uploaded. Please let me know if there is something wrong.

Thanks.