26. Convexity is the measurement of "price curvature" of a bond "in the neighborhood" of the bond's current market rate and price point: V_ + V+ 21. Convexity 2V (Ay)2 where Ay = 0.50% Y- = YO - Ay YO = current market rate of bond Y+ = YO + Ay correspondind to V- = price of bond @ Y- corresponding to VO = current price of bond corresponding to V+ = price of bond @ Y+ Thus the measurement is based on "neighborhood" bond prices of V- and V+ which corresponds to change in neighborhood yields -- YO + 0.5% -- i.e. Y- and Y+ from its current bond market rate YO. Convex Funds, a bond investment company, underwrote a set of bonds with the following characteristics: C/Y MktRate Face feature Maturity (yrs) 30 Coupon Rate 3.00% 2 3.00% 1,000 noncallable Using the above formula and data, calculate this bond's Convexity by calculating and filling in the template: fill in these ... Use above formula to calculate in space below: Y- Yo Y+ calculate these bond prices PS: leave them in positive numbers V- Vo V+ Convexity = 253.5303