Question
The current price of a BLX Inc. bond is $103.00. If the yield increased by 50 basis points (bp), the price would decline to $100.25
The current price of a BLX Inc. bond is $103.00. If the yield increased by 50 basis points (bp), the price would decline to $100.25 while if the yield decreased by 50 bp, the price would increase to $104.50. What is the effective convexity of the bond?
Step by Step Solution
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Step: 1
To calculate the effective convexity of a bond we need to use the formula Effect...
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Step: 2
Step: 3
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
9th Edition
73530700, 978-0073530703
