A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration...

A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond currently sells at a yield to maturity of 8%.

Please find the price of the bond if its yield to maturity falls to 7% or rise to 9%.
What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? What is the percent error for each rule? What do you conclude about the accuracy of the two rules?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

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