Question: Please show all calculations not just excel A five-year, 6.5% bond with a YTM of 5.0% has a duration of 4.45 and convexity of 25.59.

  1. Please show all calculations not just excel A five-year, 6.5% bond with a YTM of 5.0% has a duration of 4.45 and convexity of 25.59. The bonds current price quote is 106.494. Assume the bond pays annual coupons and has a par value of $1.000.
    1. Compute the percentage change in the bonds price if its YTM increases 60 basis points.
    2. Estimate the percentage change in the bonds price using modified duration and the convexity correction (the duration & convexity rule) if the bonds YTM increases 60 basis points.
    3. Compute the percentage change in the bonds price if its YTM decreases 80 basis points.
    4. Estimate the percentage change in the bonds price using modified duration and the convexity correction (the duration & convexity rule) if the bonds YTM decreases 80 basis points.

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