A $13-$year$-$maturity zero$-$coupon bond selling at a yield to maturity of $9\mathrm{.}25\%($effective annual yield$)$ has convexity of $161\mathrm{.}1$ and modified duration of $12\mathrm{.}06$ years. A $30-$year$-$maturity $5\mathrm{.}5\%$ coupon bond making annual coupon payments also selling at a yield to maturity of $9\mathrm{.}25\%$ has nearly identical duration$-12\mathrm{.}04$ years$-$but considerably higher convexity of $233\mathrm{.}7.$

Required:

a$.$ Suppose the yield to maturity on both bonds increases to $10\mathrm{.}25\%.$ What will be the actual percentage capital loss on each bond? What percentage capital loss would be predicted by the duration$-$with$-$convexity rule?

b$.$ Suppose the yield to maturity on both bonds decreases to $8\mathrm{.}25\%.$ What will be the actual percentage capital loss on each bond? What percentage capital loss would be predicted by the duration$-$with$-$convexity rule?

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

Suppose the yield to maturity on both bonds increases to $10\mathrm{.}25\%.$ What will be the actual percentage capital loss on each bond? What percentage capital loss would be predicted by the duration$-$with$-$convexity rule?

Note: Input all amounts as positive values. Do not round intermediate calculations. Round your answers to $2$ decimal places.

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