A $100 par value bond with 2% annual coupons and maturing at $105 in 3 years....

A $100 par value bond with 2% annual coupons and maturing at $105 in 3 years. Given an effective annual interest rate of 5%,

a) Compute the Macaulay convexity of this asset.

b) Compute the modified convexity of this asset.

Expert Solution

Formula sheet

jeff jeffy answered 1 year ago

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