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Calculate the exact change in bond price

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Question - A 20 year bond with a 6.5% coupon paid semiannually has a yield of 6.24%. Using a 1 bp change in yield, compute the approximate modified duration and approximate convexity of the bond. Using these, compute the approximate change in bond price when the bond yield increases by 150 bps. Calculate the exact change in bond price when the bond yield increases by 150 bps, and compare the two.

Reference no: EM132838386

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