B.) Answer Choices: 1.) It is enough to consider the effect of duration. 2.) It is enough to consider the effect of convexity. 3.) You must consider the effects of convexity and duration.

D.) Answer Choices: 1.) Lower. 2.) Higher.

Noncallable Assume bond pays interest semiannually. Use only the data provided in the table above (in the problem stetement) foc your caiculatisns. a. Calculate the opproximate price change for this bond using only its duration, assuming its yieid to maturity incressed by 100 basis points, Do not round intermediate calculations. Round your answer to two decimal places. Use a minus sign to enter negative value, if any. Percentage change in price: When you are dealing with large yleld changes to calculate more precise bond price change on price change. b. Calculate the approximate price change for this bond, using only duration, if its vield to maturity decined by 200 basis points. Do not round intermediate calculations. Round your answer to two decimal places. Use a minus sign to enter negative value, if any. Percentage change in price: c. Caiculate the approximate price change for this bond using both duration and comvexity in the computation, once again aswuming that its veld to maturity dedined Ey 200 basis points. Do not round intermedate calculations. Round your answer to two decimal places. Use a minus sign to enter negative value, if any. Percentage change in peice: d. Discuss (without calculations) what would happen to your estimate of the price change if this was a callable bond. When rates deeine, the price of callable bond increases at a rate than the price of noncallable bond