A perpetual bond, which pays a coupon of 1 in each period, has a yield of...
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A perpetual bond, which pays a coupon of 1 in each period, has a yield of 5%. In this case, what is the exact value of the Modified Duration and the Convexity of the bond? a. Modified Duration is 20 while Convexity is 800. b. Modified Duration and Convexity is also 400. c. Modified Duration is 5, while the Convexity is 25. d. Modified Duration and Convexity is also 5. e. Perpetual bonds have no duration or convexity, because their maturity goes to infinity. A perpetual bond, which pays a coupon of 1 in each period, has a yield of 5%. In this case, what is the exact value of the Modified Duration and the Convexity of the bond? a. Modified Duration is 20 while Convexity is 800. b. Modified Duration and Convexity is also 400. c. Modified Duration is 5, while the Convexity is 25. d. Modified Duration and Convexity is also 5. e. Perpetual bonds have no duration or convexity, because their maturity goes to infinity.
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Introduction Perpetual bonds also known as consols are financial instruments with no maturity date T... View the full answer
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