a)A $100,000 bond has a term to maturity of one year. There are two coupon interest payments yet to be paid, one due in 6 months and the second to be paid along with the face value when the bond matures in one year. The coupon rate is 6% per annum, payable half-yearly, and the yield to maturity is 4% per annum, compounded half-yearly. The current price of the bond in $101,941.56.

(i)Calculate the duration of the bond.

(i)Calculate the convexity of the bond.

a)A zero-coupon bond has one year to maturity and a face value of $100,000. The yield to maturity is 9% per annum, compounded half-yearly.

(i)Calculate the current price of the bond.

(i)What is the duration of the bond?

a)Identify and briefly discuss 3 risks relating to Australian Government 10-year bonds.