Calculate bonds effective duration and effective convexity

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Reference no: EM132009643

1. You have $1,003 today, and want to double your money in 6 years. What interest rate must you earn to achieve your goal? Enter rate in percents, accurate to two decimal places.

2. Ten years ago, a man invested $1,100 in a 5-year certificate of deposit paying 10%, compounded monthly. When the CD matured, he invested the proceeds in another 5-year CD paying 8%, compounded semiannually. How much is available now?

3. Consider a 20 year, semiannual- pay bond with 8% coupon that is currently priced at $908.00 to yield 9%. Calculate the bonds effective duration and effective convexity for a 50 basis point change in yield.

Reference no: EM132009643

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