Question: a. Use a spreadsheet to answer this question and assume the yield curve is flat at a level of 4%. Calculate the convexity of a

a. Use a spreadsheet to answer this question and assume the yield curve is flat at a level of 4%. Calculate the convexity of a "bullet" fixed-income that is, a with a single cash flow. Suppose a single $1,000 cash flow is paid in year 5.
b. Now calculate the convexity of a "barbell" fixed-income that is, a with equal cash flows over time. Suppose the security makes $100 cash flows in each of years 1-9, so that its duration is close to the bullet in part a.
c. Do barbells or bullets have greater convexity?

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