Question
1. Consider a bond that has a maturity of four years and pays a 3% coupon rate (with annual coupon payments). The bond sells at
1. Consider a bond that has a maturity of four years and pays a 3% coupon rate (with annual coupon payments). The bond sells at a par value of $100. Calculate the bonds convexity, and enter your answer with two decimal places.
2. If YTM increases by 200 bps, calculate the new price of the bond predicted by using both duration and convexity.
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Financial Performance
Authors: Marc Bertoneche, Rory Knight
1st Edition
0750640111, 978-0750640114
