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What is the convexity and duration of the bond

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Reference no: EM132657225

A 10-year maturity bond making annual coupon payments with a coupon rate of 10%, the bond currently sells at a yield to maturity of 8%.

a. What is the price of the bond now at 8% ytm?

b. What is the convexity and duration of the bond?

c. What is the price of the bond if its yield to maturity falls to 7% or rises to 9%. (Use bond valuation formula)

d. What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? What do you conclude about the accuracy of the two rules?

Reference no: EM132657225

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