Percent price change due to both duration and convexity

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A 6.5% coupon bearing bond that pays interest semi-annually has a yield to maturity of 8.5% per year. This bond has a duration of 18.6 years and a convexity of 127. If the market yield increases 85 basis points, calculate an estimate of the percent price change due to both duration and convexity. (Answer to the nearest hundredth of a percent, i.e. 1.23 but do not use the % sign).

Reference no: EM131528779

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