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What is the change in the bond price if yield rate

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Reference no: EM132423148

The professor purchases a 12 year bond at a purchase price of $1950 which has a par value of $2500 at a coupon rate of 6.75% p.a. The yield rate is flat at 12%p.a. By referring to the approximate convexity of the bond and the modified duration of the bond what is the change in the bond price if yield rate increase by 3%.

Reference no: EM132423148

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