Use the Following Discount Factors When Needed

question 12

Short Answer

Use the following discount factors when needed.
-Calculate the convexity of the following portfolio:
i. 2 units of a 1.5-year ?xed rate bond paying 6% quarterly.
ii. 4 units of a 1.75-year ?oating rate bond paying ?oat + 80 bps semi- annually. You know that the reference rate was 7% three months ago. 13
iii. 6 units of a 2-year zero coupon bond.
iv. 1 units of a 1.5-year ?oating rate bond with no spread paid semian- nually.

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Definitions:

Actions

The things that an individual does, often in response to external stimuli or internal decisions.

Cognitive Dissonance

The psychological discomfort experienced by an individual who holds two or more contradictory beliefs, values, or ideas simultaneously.

Zimbardo's Simulated Prison

An experiment conducted by psychologist Philip Zimbardo in 1971 to investigate the psychological effects of perceived power, focusing on the struggle between prisoners and prison officers.

Role Playing

A method or technique where individuals act out or perform the part of characters in particular scenarios, often used in training or therapy.