You have a 15-year maturity, 4% coupon, 6% yield bond with duration of 10.5 years and a convexity of 128.75. The bond is currently priced at $805.76. If the interest rate were to increase 200 basis points, your predicted new price for the bond (including convexity) is. Select one: O A. $662.23 OB. $642.54 OC. $705.03 D. $638.85

Convexity is the fine-tuner for determining how responsive the price of a bond is to changes in…

Answered: You have a 15-year maturity, 4% coupon, 6% yield bond with duration of 10.5 years and a convexity of 128.75. The bond is currently priced at $805.76. If the…

Essentials Of Investments

11th Edition

ISBN: 9781260013924

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

Publisher: Mcgraw-hill Education,

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Question

You have a 15-year maturity, 4% coupon, 6% yield bond with duration of 10.5 years and a convexity of 128.75. The bond is currently priced
at $805.76. If the interest rate were to increase 200 basis points, your predicted new price for the bond (including convexity) is
Select one:
O A. $662.23
B. $642.54
OC. $705.03
OD. $638.85

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