Calculate approximate percent increase in price for bond

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Reference no: EM131600183

Consider a 25-year zero-coupon bond with $10 million par value and interest accruing semiannually. The bond is currently priced at $400,297, representing a yield to maturity of 13.30%. Calculate the approximate percent increase in price for this bond using the duration/convexity adjustment method if the bond’s YTM were to decrease by 75 basis points. (Hint: Don’t forget to assume semiannual compounding)

Reference no: EM131600183

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