Calculate the bonds convexity

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1. Calculate the price, Macaulay Duration, and modified duration of the bonds of funco corporation. funco has a coupon rate of 6% paid semi-annually. The bonds yield 7% and matures in 3 years.

2. If required yield on the bond moved up 50 basis points the price of the bond would be $960.36. If required yield on the bond moved down 50 basis points the price of the bond would be $986.57. Calculate the bonds convexity.

3. Using your duration and convexity calculations from above, what do you estimate the price of the bond would be given a 75 basis point move up in required yield on the bond?

Reference no: EM131878409

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