Answer: Increase in magnitude | Decrease in magnitude

## Explanation For an option-free bond, convexity has the following effects: - **When yields decrease**: The convexity adjustment increases the magnitude of the price change (makes it more positive) - **When yields increase**: The convexity adjustment decreases the magnitude of the price change (makes it less negative) This is because convexity measures the curvature of the price-yield relationship. For option-free bonds, convexity is positive, which means: - Bond prices rise more than predicted by duration alone when yields fall - Bond prices fall less than predicted by duration alone when yields rise Therefore, the correct answer is: - **Decrease in Yield**: Increase in magnitude - **Increase in Yield**: Decrease in magnitude

Author: LeetQuiz .