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  3. Bond Valuation and Analysis in Python

Exercise

Combining duration and convexity

Now let's combine everything you have learned in the last few chapters by using both duration and convexity to predict bond price changes. Take a 7 year bond that pays an annual coupon of 3% and has a yield to maturity of 4%.

numpy_financial has already been imported for you as npf.

Instructions 1/4

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  • Find the price of a 7 year bond that pays an annual coupon of 3% and has a yield to maturity of 4%, then shift the yields up and down 1% and reprice.