What is the duration-with-convexity approximation

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A 20 year bond with an annual coupon of 10% has a duration of 10 years and a convexity of 136. The YTM of the bond decreases from 8% to 7%. What is the actual percent change in bond price? What is the duration approximation of the percent change in bond price? What is the duration-with-convexity approximation of the percent change in bond price? Interpret your results.

Reference no: EM13956339

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