Question: Given the Macaulay duration for a semiannual 7.5% bond with 5 years to maturity and a yield of 6.75% is equal to 4.2740 years and

Given the Macaulay duration for a semiannual 7.5% bond with 5 years to maturity and a yield of 6.75% is equal to 4.2740 years and the convexity is equal to 20.80, if interest rates fall by 0.5% what is the change in the bond price based on duration and convexity?

+4.186%

+2.093%

-4.186%

-2.093%

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