1. Use duration to explain the “negative convexity” exhibited by callable bonds. Which would have a longer Macaulay duration—a growth stock with low dividend yield, or a mature stock with a high dividend yield?
2. An investor places $9,050.00 in an account that pays 7.00% per year. The investor is interested in the account balance over the next few years. Specifically, he wants to know the balance for the following milestones: MILESTONE: Years MILESTONE 1: 3.00 years MILESTONE 2: 6.00 years MILESTONE 3: 11.00 years What is the balance after Milestone 1?