7. Use the following information for the questions. Assume 2 year annual coupon bond with coupon interest rate = 10%. Bond price is $ 919 and face value =$ 1,000.

7-1) (10 points) Calculate the YTM.

7-2) (10 points) Check your answer by EXCEL RATE function. Provide the information for RATE (NPER,PMT,PV,FV).

7-3) (10 points) Calculate the market price by using the answer for 7-1).

7-4) (15 points) Calculate the Duration

7-5) (10 points) Explain the concept of modified duration and calculate it for the above bond.

7-6) (15 Points) Fully discuss the convexity issue in bond investment and illustrate this issue by using a graph.