Consider a 6%, 25-year bond selling to yield 9%. Its modified duration is 10.62 and convexity is 182.92. If the yield changes of 12%, calculate the percentage change in price based on a combination of both duration and convexity? O a.-23.629% O b.-17.582% Oc-31.86% O d.-20.66%

Consider a 6%, 25-year bond selling to yield 9%. Its modified duration is 10.62 and convexity is 182.92. If the yield changes of 12%, calculate the percentage change in price based on a combination of both duration and convexity? O a.-23.629% O b.-17.582% Oc-31.86% O d.-20.66%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Consider a 6%, 25-year bond selling to yield 9%. Its modified duration is 10.62 and convexity is 182.92. If the yield changes of 12%, calculate the percentage change in
price based on a combination of both duration and convexity?
O a.-23.629%
O b.-17.582%
Oc-31.86%
Od.-20.66%

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