Problem 3. Suppose the yield curve is flat at 4%, and you bought 100 4-year, 2% coupon bonds with faces of $1,000, exposing you to IR risk. (a) What's the bonds convexity? (b) What is the approximate price change if yield is 5%? (c) Suppose you have 5 and 7 year zeros available. How would you hedge duration and convex- ity? (d) What happens to the portfolio if yield goes to 5%? Problem 3. Suppose the yield curve is flat at 4%, and you bought 100 4-year, 2% coupon bonds with faces of $1,000, exposing you to IR risk. (a) What's the bonds convexity? (b) What is the approximate price change if yield is 5%? (c) Suppose you have 5 and 7 year zeros available. How would you hedge duration and convex- ity? (d) What happens to the portfolio if yield goes to 5%