Dollar duration and convexity are used to characterize and to control the riskiness of fixed income securities. However, several examples were presented in the lectures to 2 exhibit the limitations of these measures. One way we might attempt to improve these measures is by making them more robust to non-uniform shifts in the term structure. From the expression for the price of a fixed income security that makes annual pay- ments over four years,

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Improving Dollar Duration and Convexity for NonUniform Shifts Youre right dollar duration and convexity have limitations in capturing the full risk of ... View the full answer