In the absence of default risk, changes in interest rates will cause immediate changes in bond prices. We use duration or a combination of duration and convexity to approximate the bond price changes. The formula is shown below. Question: Explain how duration with convexity can do a better job than duration alone. Your explanation should discuss the scenario of an increasing or decreasing interest rate separately. %APV Full (-AnnModDur XAYield) + B -x AnnConvexityX(AYield)