A company just issued a bond with the following characteristics:
Maturity = 3 years
Coupon rate = 8%
Face value = $1,000
YTM = 10%
Interest is paid annually and the bond is noncallable.
Calculate the bond’s Macaulay duration? Round "Present value" to 2 decimal places and "Duration" to 4 decimal place.?
Calculate the bond’s modified duration.
Assuming the bond’s YTM goes from 10% to 9.5%, calculate an estimate of the price change without considering convexity
Calculate the convexity of the bond.