4. Dollar Duration and Convexity - 40 Points The following coupon bond prices and cash flows: implies discount factors for years 1,,5 as follows: For each Bond 1,,5 : (a) Compute its dollar duration $ and dollar gamma $. (b) How much its value decreases following a 1% parallel upward shift in the spot rate curve, according to the dollar duration model? (c) How much its value decreases following a 1% parallel upward shift in the spot rate curve, according to the dollar duration-convexity model? 4. Dollar Duration and Convexity - 40 Points The following coupon bond prices and cash flows: implies discount factors for years 1,,5 as follows: For each Bond 1,,5 : (a) Compute its dollar duration $ and dollar gamma $. (b) How much its value decreases following a 1% parallel upward shift in the spot rate curve, according to the dollar duration model? (c) How much its value decreases following a 1% parallel upward shift in the spot rate curve, according to the dollar duration-convexity model