Question
Consider a 2-year coupon bond that pays coupon annually with a coupon rate of 3%, face value $1000, a yield to maturity of 4%. (a)
Consider a 2-year coupon bond that pays coupon annually with a coupon rate of 3%, face value $1000, a yield to maturity of 4%.
(a) What is the approximated bond price estimated by duration if the yield is increased by 0.5%?
(b) What is the convexity of this coupon bond?
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
6th Canadian edition
1259024962, 978-1259024962
