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Calculate the duration and convexity

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Reference no: EM133118254

Given the bond information below,

Time to maturity: 10 years

Yield: 1.5%

Coupon rate: 2.5%.

  1. Please use the following bond to calculate the duration and convexity.
  2. If the interest rate increases, the duration should decrease.  Do you agree? Why?
  3. A Portfolio manager in the current market should increase the duration of the portfolio. Do you agree? Why?

Reference no: EM133118254

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