How is Bond Valuation done? Explain the application of the concepts of duration and convexity in bond valuation.

Bond valuation is a critical aspect of the financial markets, particularly in the debt market where bonds are commonly traded. Investors and analysts use various methods to assess the fair value of bonds, and two essential concepts in this process are duration and convexity.

### Bond Valuation:

Bond valuation is the process of determining the intrinsic value of a bond, which represents the present value of its future cash flows. The primary cash flows associated with bonds include periodic interest payments and the return of the principal amount at maturity.

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