Question
A sixyear annual bond with yield of 4% provides a 5% coupon at the end of each year. Use duration and convexity to estimate the
A sixyear annual bond with yield of 4% provides a 5% coupon at the end of each year. Use duration and convexity to estimate the effect of a 1% increase in the yield on the price of the bond. Suppose the Par = $100. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16)
a. The bond's price is $ Incorrect answer:________ .
b. The Maculay Duration of the bond is Incorrect answer:______ .
c. The convexity is Incorrect answer: _____ .
d. The %price change is Incorrect answer: ____ % if there is a 1% increase in the yield.
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