Question: Question 6 (Total 10 marks) (a) For a bond that has 18 months before maturity and pays a semiannual coupon of 8% per annum, the

Question 6 (Total 10 marks) (a) For a bond that has

Question 6 (Total 10 marks) (a) For a bond that has 18 months before maturity and pays a semiannual coupon of 8% per annum, the bond yield is 10% per annum with continuous compounding. What is the bond's price? (The bond face value is $100.) (b) Calculate the convexity of the bond in Part (a), and explain when the convexity may be needed

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