Price change in his portfolio value

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Fred manages a portfolio of bonds, for which he knows the modified duration is 6.8, and he has also calculated the convexity as 153, and the average coupon rate of his bonds is 8.5%. This morning, his boss has said she is concerned about a possible decrease of 3.4% in average yields across the market, and she has asked Fred for his best estimate of the % price change in his portfolio value. What answer should Fred give his boss?

Reference no: EM133057058

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