Consider a 17-year zero coupon bond.

A. Plot the value of the bond P(y) for yields ranging from 0% to 30%. [2 points]

B. Add to the graph the price of the same bond after 12 years have passed (i.e. it will be a 5-year zero coupon bond). [2 points]

C. Using your graph, explain what happens through time (at any given yield) to:

a. The bonds price

b. The bonds interest rate risk

c. The bonds convexity.