Question: Consider a two year bond with par value $1000, current price $1000, and annual coupons of $100. (a) What is the yield to maturity, duration,

Consider a two year bond with par value $1000, current price $1000, and annual coupons of $100. (a) What is the yield to maturity, duration, modified duration, and convexity; and (b.) If the yield to maturity is increased by one percentage point, what is the new price? First compute approximation using just duration or modified duration. Second compute approximation with duration and convexity. Third compute the new price exactly.

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