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Why do callable bonds have negative convexity? As rates decline, callable bonds are more likely to be called and therefore their maturities (duration) shortens. As

Why do callable bonds have negative convexity?

As rates decline, callable bonds are more likely to be called and therefore their maturities (duration) shortens.

As rates increase, yields decline

Callable bonds are less attractive to investors in rising rate environments

Callable bonds carry higher yields than option free bonds

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