What is the percentage change in the bonds price

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Question: As a financial analyst at Wells Fargo, you are analyzing how the change in yield impacts the bond price. A bond has a duration of 11 years, a yield of 10%, a convexity of 140, and a market price of $1,000. Suppose the market yield increases by 60 basis points.

What is the percentage change in the bond's price by the duration only formula? (sample answer: 2.25% or -2.25%)

What is the bond price after the yield change predicted by the duration only formula? (sample answer: $1050.65)

What is the percentage change in the bond's price predicted by the duration with convexity formula? (sample answer: 2.25% or -2.25%)

What is the bond price after the yield change predicted by the duration with convexity formula? (sample answer: $1050.65)

Reference no: EM133264477

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