# Question: A Compute the convexity of a 3 year bond paying annual

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?

## Answer to relevant Questions

Suppose a 10-year zero-coupon bond with a face value of $100 trades at $69.20205. a. What is the yield to maturity and modified duration of the zero-coupon bond? b. Calculate the approximate bond price change for a ...Using the information in Table 7.1, a. Compute the implied forward rate from time 1 to time 3. b. Compute the implied forward price of a par 2-year coupon bond that will be issued at time 1. What is the fixed rate in a 5-quarter interest rate swap with the first settlement in quarter 2? Consider the 3-year swap in the previous example. Suppose you are the fixed-rate payer in the swap. How much have you overpaid relative to the forward price after the first swap settlement? What is the cumulative overpayment ...In each case identify the arbitrage and demonstrate how you would make money by creating a table showing your payoff. a. Consider two European options on the same stock with the same time to expiration. The 90-strike call ...Post your question