Find the price of the bond if its yield to maturity falls

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A 30-year maturity bond making annual coupon payments with a coupon rate of 16.0% has duration of 10.55 years and convexity of 161.7. The bond currently sells at a yield to maturity of 9%.

Find the price of the bond if its yield to maturity falls to 8% or rises to 10%.

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?

Reference no: EM13334140

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