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  3. 2) assume that the yield curve for zero-coupon bon

2) Assume that the yield curve for zero-coupon bonds as a function of maturity T...

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Finance

2) Assume that the yield curve for zero-coupon bonds as a function of maturity T is: y(T) = 0.01 + .002 T

Consider a 10-year, 4% coupon bond (paid annually) with face value = $100. Calculate:

2A) The present value of the bond

2B) Its Macaulay duration

2C) Its modified duration

2D) Its convexity

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