Answer: Increase in magnitude

## Explanation For an option-free bond, convexity has the following effects: - **For a decrease in yield**: The convexity adjustment **increases** the magnitude of the bond price change (makes the price increase more than what duration alone would predict) - **For an increase in yield**: The convexity adjustment **decreases** the magnitude of the bond price change (makes the price decrease less than what duration alone would predict) This is because convexity measures the curvature of the price-yield relationship. Positive convexity means that as yields decrease, bond prices increase at an increasing rate, and as yields increase, bond prices decrease at a decreasing rate. Therefore, the correct answer is: - **Decrease in Yield**: Increase in magnitude - **Increase in Yield**: Decrease in magnitude This corresponds to **Option A**.

Author: LeetQuiz Editorial Team