Question: 5. You have been asked to evaluate a 20 year bond with 4% semiannual coupons, with a current yield of 5% semiannual. a. What is

5. You have been asked to evaluate a 20 year bond with 4% semiannual coupons, with a current yield of 5% semiannual. a. What is the price of this bond? b. What is the duration and convexity using a delta of 0.001 (10 basis points)? c. Estimate the price of this bond at a 7% yield using the duration/convexity approximation. d. Compare the answer in c. to the exact price. 5. You have been asked to evaluate a 20 year bond with 4% semiannual coupons, with a current yield of 5% semiannual. a. What is the price of this bond? b. What is the duration and convexity using a delta of 0.001 (10 basis points)? c. Estimate the price of this bond at a 7% yield using the duration/convexity approximation. d. Compare the answer in c. to the exact price

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