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Assume that the yield curve is flat at 5.4%. The bond has 3 years to maturity, and pays coupons annually. The face value of the

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Assume that the yield curve is flat at 5.4%. The bond has 3 years to maturity, and pays coupons annually. The face value of the bond is $100, and the bond pays a 5.12% coupon rate. (a) Compute the price of the bond. (b) Compute the modified duration of the bond. (c) Compute the convexity of the bond by applying the formula: 11 d2 B CX= 2 B dy2 ? where B is the bond price and y is the bond yield

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