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Consider a Bond Selling at Par with Modified Duration of 10.6

question 5

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Consider a bond selling at par with modified duration of 10.6 years and convexity of 210. A 2% decrease in yield would cause the price to increase by 21.2% according to the duration rule. What would be the percentage price change according to the duration-with-convexity rule?


Definitions:

Sales Projection

An estimate of the future sales revenue of a company, often based on historical sales data and market analysis.

Net Income

The amount of money a company retains as profit after removing expenses and taxes from its revenue.

Sales Growth

The increase in sales over a specific period, indicating the health and scalability of a business.

Costs Percentage

The proportion of costs (operational, production, etc.) relative to some base measure, such as sales.

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