A bond is selling at par with the Macaulay duration of 11.2 years and the modified duration of 10.6 years. The convexity of the bond is 196. According to the duration rule, a 2% decrease in yield would cause the price to increase by 21.2%. What would be the percentage price change according to the duration-with-convexity rule?

Answer rating: 100% (QA)

The percentage price change according to the durationwith... View the full answer