(3.1). Compute the convexity of an asset that pays level annual dividends of 70 at the end of each year into perpetuity at an effective annual interest rate of i = 5%.

(3.2). A $100 par value bond with 2% annual coupons and maturing at $113 in 3 years. Given an effective annual interest rate of 3%, compute the convexity of this bond.