Question
Calculate the convexity for a three-year 3.5% coupon rate with a face value of $500,000 loan with amortised payments? Use this information to determine the
Calculate the convexity for a three-year 3.5% coupon rate with a face value of $500,000 loan with amortised payments?
Use this information to determine the impact on the market value of the amortised loan if the entire yield curve shifted downward?
What is the usefulness of convexity when duration is available as a measure of interest rate risk?
What is the practical implication for the three-year loan in this example?
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Personal Finance Turning Money into Wealth
Authors: Arthur J. Keown
7th edition
978-0133856507, 013385650X, 133856437, 978-0133856439
