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Calculate the convexity of the bond

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Reference no: EM133081884

(1) Calculate the convexity of the following bond: annual coupon rate: 8% (coupons are made semi-annually);

YTM:6%

Maturity: 2 years

Par value: $100

(2) Based on the formula ΔP/P=1/2 convexity⋅(Δy)^2, explain when convexity has a big influence on bond price.

Reference no: EM133081884

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