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We invest in a pair of zero- pupon bonds. One of them xpires within a year paying 0,000 euros. Its current price is 433.28 euros. The other expires two years aying 11,000 euros, and its urrent price is 9,788.48 euros. alculate: The yield of each bond. O The duration and modified uration of each bond. the convexity of the bonds.

We invest in a pair of zero- pupon bonds. One of them xpires within a year paying 0,000 euros. Its current price is 433.28 euros. The other expires two years aying 11,000 euros, and its urrent price is 9,788.48 euros. alculate: The yield of each bond. O The duration and modified uration of each bond. the convexity of the bonds.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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3. We invest in a pair of zero- coupon bonds. One of them expires within a year paying 10,000 euros. Its current price is 9,433.28 euros. The other expires in two years paying 11,000 euros, and its current price is 9,788.48 euros. Calculate: a) The yield of each bond. b) The duration and modified duration of each bond. c) the convexity of the bonds. d) Which is more interesting from the investor's point of view? Justify your
Transcribed Image Text:3. We invest in a pair of zero- coupon bonds. One of them expires within a year paying 10,000 euros. Its current price is 9,433.28 euros. The other expires in two years paying 11,000 euros, and its current price is 9,788.48 euros. Calculate: a) The yield of each bond. b) The duration and modified duration of each bond. c) the convexity of the bonds. d) Which is more interesting from the investor's point of view? Justify your
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