Determining the macaulay duration of bond

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1. Find the Macaulay duration of a 6% coupon bond making annual coupon payments if it has 3 years until maturity and has a yield to maturity of 6%. What is the Macaulay duration of this bond if its yield to maturity is 10%?

2. Briefly describe bond convexity and explain why investors find positive convexity to be attractive? If two bonds were identical in all respects except Bond A had more positive convexity than Bond B, would that bond have a higher, lower, or the same price as Bond B?

Reference no: EM133068765

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