1. Calculate the convexity of this bond.
2. Now use your modified duration and convexity results to find the percentage change in the price of this bond for 0.25% increase in the interest rate.

Q#7: [10 Points] The XYZ Corporation has issued bonds that pay semiannually with the following characteristics: Cou-on YTM Maturi am Calculate Macaulay duration using the information provided Calculate modied duration using the information provided. Explain why modied duration is a better measure than maturity when calculating the bond's sensitivity to changes in interest rates. d. Identify the direction of change in modied duration if: (1) the coupon of the bond were 4 percent, not 8 percent. (2) the maturity of the bond were 7 years, not 5 years (3) the maturity of the bond were 3 years, not 5 years e. Define convexity and explain how modified duration and convexity are used to approximate the bond's percentage change in price, given a large change in interest rates. f. Calculate the convexity of this bond. Now use your modified duration and convexity results to find the percentage change in the price of this bond for 0.25% increase in the interest rate. om