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D compute the convexity measure for bond a dont

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.d.Compute the convexity measure for Bond A.Don’t forget to report the convexity measure inyears.(2 points)
e.Calculate the actual price of the bond for a 100-basis-point increase in interest rates.(2points)
12) Corp ABC issued a special bond.It is priced at $102, has a modified duration of 4, and convexity of20.a.Using duration, estimate the price of a special bond issued by ABC Corp for a 100-basis-point increase in interest rates.(2 points).04
b.Using both duration and convexity measures, estimate the price of the bond for a100-basis-point increase in interest rates.(2 points)
c.Do you expect the answer from part a or part b to be closer to the actual price?Why?(2 points)Part b.Using the duration and convexity measures together is more accurate. The reason is thatadding the convexity measure to our estimate enables us to include the second derivative thatcorrects for the convexity of the price-yield relationship.
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Bond duration, Macaulay, Zero coupon bond

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