a) Is the linear line or the convex curve represent the correct relationship between the bond price and discount rate (YTM)? Why? b) Explain why the slope of the convex curve below is steeper when YTM is lower. c) Interpret the meaning of the liner line (in relation to hedging) that is tangent to the convex curve. In other words, is duration hedging based on the liner line or convex curve? Explain. d) In relation to your answer in part (c) and the figure below, explain why we need both convexity and duration hedging rather than duration hedging only. e) What does the tangency point represent? You can draw on the figure to explain if you choose to. $1 YTM a) Is the linear line or the convex curve represent the correct relationship between the bond price and discount rate (YTM)? Why? b) Explain why the slope of the convex curve below is steeper when YTM is lower. c) Interpret the meaning of the liner line (in relation to hedging) that is tangent to the convex curve. In other words, is duration hedging based on the liner line or convex curve? Explain. d) In relation to your answer in part (c) and the figure below, explain why we need both convexity and duration hedging rather than duration hedging only. e) What does the tangency point represent? You can draw on the figure to explain if you choose to. $1 YTM