Build out a model to calculate the duration of a 5 year bond with annual payments. Allow the user to input the coupon and yield. Model should calculate a bond price and a duration. Use this model to calculate a duration for a 5% coupon and 5% yield. Now recalculate duration at 4%. Calculate convexity (choose some scenario and show me the convexity calculation).

Answer rating: 100% (QA)

To build out the model we can use the following steps Calculate the present value of each cash flow coupon payment and principal payment using the formula PV CF 1 rn where PV present value of the cash ... View the full answer