We can measure the convexity with the help of following formula:

                                                                             ...Eq. (4)

Where,

         Δy     =       Change in yield in decimal.

         V₀      =       Initial price.

         V_-      =       Price if yields decline by Δy.

         V₊     =       Price if yields increase by Δy.

It is necessary to understand following three points related to this convexity measure:

• Convexity doesn't have a simple interpretation as in the case of a duration.

• The value calculated in equation (4) is more popularly referred to as a "convexity of a bond" rather than the "convexity measure of a bond".

• Last, the convexity measure reported by the dealers and vendors will differ for an option-free bond.