Hi

@gargi.adhikari
With respect to one above, for very small changes in yield, the convexity adjustment is not required as the majority of the change in price is explained by the first derivative

Delta B/(B) = - (1/B) * dB/dY *Delta Y where the Mac D is explained by -(1/P) *dP/dY

With respect to your second question, convexity smoothens out the price changes, as

@David Harper CFA FRM likes to point out, convexity is a Bond Investor's friend both ways, so, if the price changes are less compared to a change in Yields, it implies that the convexity is more

Consider this, convexity is your curvature, if the curvature is more, say, (1/2)*c*(dY)^2 is more, the negative change in price to Yield effect is reduced. Therefore, if the Price decline is lower, the Convexity is higher

Thanks

Mani

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