Illustrate their application and outline the pros and cons the selected models

1. Find the current yield, yield to maturity, duration and convexity for each bond. Present these findings together with bond characteristics (coupon, price, maturity) and give clear but concise explanations of what each of them means. (10 marks)

2. Assume the length of your client’s investment horizon (for example 5 years). Comment on the risks the selected bonds are exposing your client to (e.g. interest rate risk, reinvestment risk, prepayment risk, default risk etc.), explaining these risks. (10 marks)

Question 3 Compare and contrast interest rate swaps and equity swaps, illustrate these swaps and explain the risks each party in a swap is facing. (20 marks)

Use Harvard referencing and be no more than 10 pages