# Question

a. Compute the convexity of a 3-year bond paying annual coupons of 4.5% and selling at par.

b. Compute the convexity of a 3-year 4.5% coupon bond that makes semiannual coupon payments and that currently sells at par.

c. Is the convexity different in the two cases? Why?

b. Compute the convexity of a 3-year 4.5% coupon bond that makes semiannual coupon payments and that currently sells at par.

c. Is the convexity different in the two cases? Why?

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