Assume that the term structure of the interest rates is flat at the continuously compounded rate...
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Assume that the term structure of the interest rates is flat at the continuously compounded rate of 4.5% Consider a 5% annual coupon bond, which matures in 4 years. a. Compute the duration b. Compute the convexity for this bond c. If the market yield rises from 4.5% to 6.2%. How would the bond price rise or fall? Assume that the term structure of the interest rates is flat at the continuously compounded rate of 4.5% Consider a 5% annual coupon bond, which matures in 4 years. a. Compute the duration b. Compute the convexity for this bond c. If the market yield rises from 4.5% to 6.2%. How would the bond price rise or fall?
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