Question: Note: answer required in 30 mnts please help Exercise: The current yield curve is flat at 5%. a) What are the values of the duration

Note: answer required in 30 mnts please help

Note: answer required in 30 mnts please help Exercise: The current yield

Exercise: The current yield curve is flat at 5%. a) What are the values of the duration and the convexity for the following bonds without default risk? Zero Bond, matures in 4.35 years; nominal value 100 (pari) W Coupon bond, matures in 5 years; nominal value 100 (pari); coupon rate 8% b) Which bond should an investor choose? Which bond has a higher interest rate risk? Exercise: Repeat the calculations of the duration and the convexity using continuous compounding! 410 / 1126

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