Question: Hello kindly help me with question five calculations, thank you Question 5. A sixyear bend, with a Face Value of $1000 has yield rate of

Hello kindly help me with question five calculations, thank you

Hello kindly help me with question five calculations, thank you Question 5.

Question 5. A sixyear bend, with a Face Value of $1000 has yield rate of 5% compounded continuously, and coupon rate of 5% compounded semiannually, paid every halfyear. You are required to: a) compute the price of bond b) compute the the duration of bond c] compute the convexity of bond. d) Use duration to estimate the effect of a 1% increase in the yield on the price of bond. e) Use convexity to estimate the e'ect of a 1% increase in the yield on the the price of bond. f) How accurate is the estimated price of the bond based on your answers in (d) and e). Hint: You will need to calculate the price of the bond given a 1 0 increase of the yield and compare your answers with parts (d) and (e). [30 marks] "END" FM305 Financial Risk Management

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