a)compute (1) the dollar duration and the (2) the dollar convexity of a 3-year, $100,000 face-value, 6%p.a. annual coupon bond when the yield is 5%p.a..

b) compute the value of the above bond if its yield rises from 5%p.a. to 6%p.a.

c) using the dollar duration and the dollar convexity, compute the approximate dollar decrease in the value of the bond when the yield from 5%p.a. to 6%p.a. what is the dollar size of the error associated with duration and convexity approximation?