Calculate the bond dirty price

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1. A bond with a 5% coupon rate, with a face value of £250 pays coupons semi-annually. The bond has a maturity of 1.9 years. The required yield is 6% which is discounted at a semi-annual rate. Complete the following table and calculate the bond's dirty price.

Time to payment Cash flow (£) Discount factor Discounted cash flow (£) Dirty price (£)

2. Use continuous compounding to calculate the dirty price of a 9% coupon bond that pays coupons semi-annually, has a face value of £100 and has a maturity of two years. The term structure of interest rates is flat at 5%. Hence, calculate the bond's duration and convexity.

Reference no: EM132999962

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