What is convexity with respect to bond

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1. What is convexity with respect to bond? How the sensitivity of the bond's price to interest rate changes (a) with respect to change in maturity and (b) with respect to change in coupon rate?

2. A bond has a flat price of $980, and it pays 10% semi-annual coupon. The last coupon payment was made 50 days ago. What is the invoice price? [Hint: First find the coupon, then accrued interest, and then the invoice price]

3. An 8% semi-annual coupon bond matures in 5 years and is selling today at an $70 discount from par value. What are the yield to maturity and current yield on this bond?

Reference no: EM132478359

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