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 portfolio, that is, a portfolio 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 fixe...

a The following spreadsheet shows that the convexity of the bullet bond is 28 2779 The present value ...

a. Use a spreadsheet to answer this question and assume the yield curve is flat at a

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 "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?
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...