Calculate duration and convexity

Reference no: EM13826644

Problem:

Given the two bonds in the table below, calculate duration and convexity for each of them, and decide which bond an investor should purchase if the investor is allowed to hold only one of them. Explain why.

	Face Value	Coupon Rate	Maturity	Yield to Maturity
Bond A	$1,000	9.0%	10 years	9.0%
Bond B	$1,000	3.1%	8 years	9.0%

Reference no: EM13826644

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