a. Compute the convexity of a 3-year bond paying annual coupons of 4.5% and selling at par.
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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? Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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