40. Calculate the duration and convexity of the following price functions exactly, and using the approximation formulas with both Di ¼ 0:01, and Di ¼ 0:001. For the duration, compare the results of (9.52) with (9.51). Assume 100 par for part (a), and a loan of 100 in part (b).

(a) 8% annual dividend preferred stock, with an annual yield of 10%

(b) A 5-year, monthly repayment schedule loan made with a monthly loan rate of 10%, priced with a yield of 12% monthly