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Bond : Coupon (Annual) 16. 0 7 .0% YTM Maturity years) Pmt. Frequency: (Semiannual) 1....

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Bond : Coupon (Annual) 16. 0 7 .0% YTM Maturity years) Pmt. Frequency: (Semiannual) 1. Please value each bond. Bond Price Bond A: Bond B 2. What is Effective Yield and Current Yield for each bond? Effective Yield Current Yield Bond A: Bond B 3. For each bond, calculate the Macaulay Duration, Modified Duration and Convexity Macaulay Duration Modified Duration Convexity Bond A Bond B 4. Using duration only, please calculate the price of Bond A and Bond B, assuming interest rates increase by 400 basis points. How does your answer differ from the actual price of the bond? What explains the difference and please show how convexity will improve the price approximation relative to the actual price

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