Duration rule and the duration-with-convexity rule

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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%. Find the price of the bond if its yield to maturity falls to 7% or rises to 9%. What percentage price changes would be predicted by the duration rule and the duration-with-convexity rule?

Reference no: EM131444692

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