Name two ways convexity can occur

Of course, one reason is callable bond as interest rate goes down, the price flattens out but what’s the second reason?

you mean, negative convexity can occur?

Right, sorry that’s what I meant.


Less convexity when Interest goes up for Putable Bonds…

I would say MBS is the 2nd one, like pupdawg82

Yes, in case where they would exhibit Negative Convexity…

MBS and callable bonds are examples of securities that exhibit negative convexity. I meant to ask whether there is another way that a security can have negative convexity except when the interest rate goes down.