What are the convexity and duration of the bond

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A newly issued bond has a maturity of 10 years and pays a 7% coupon rate (with coupons coming once annually). the bond sells at par.

A) What are the convexity and duration of the bond?

B) Find the actual price of the bond assuming that its YTM immediately increases from 7% to 8% (with maturity still at 10 years)

C) What price would be predicted by the duration equation? What is the percentage error of that calculation?

D) What price would be predicted by the duration with convexity rule? what is the percentage error of that calculation?

Reference no: EM131893238

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