1. Find the Macaulay duration of a 6% coupon bond making annual coupon payments if it has 3 years until maturity and has a yield to maturity of 6%. What is theMacaulay duration of this bond if its yield to maturity is 10%?

2. Briefly describe bond convexity and explain why investors find positive convexity tobe attractive? If two bonds were identical in all respects except Bond A had morepositive convexity than Bond B, would that bond have a higher, lower, or the sameprice as Bond B?