You have money to invest for 10 years and are trying to determine whether to buy and hold a 10 year par bond with yield of 1.76% or to purchase a duration equal portfolio of 2 year par bond with yield of 0.79% and a 30 year par bond with yield of 2.64%. i) Calculate the cost of convexity associated with the 2 + 30 portfolio. ii) Provide an estimate of the markets expectation of the volatility of interest rates. (Hint: this requires the convexity of the par bonds to be calculated).