Question: In this assignment, you'll be analyzing a bond issued by Proctor & Gamble. The bond has a 4.5% coupon (paid annually), $1000 par amount, and

In this assignment, you'll be analyzing a bond issued by Proctor & Gamble. The bond has a 4.5% coupon (paid annually), $1000 par amount, and matures in February 15, 2025. Assume that the coupon in February 15, 2019 has just passed, and the next coupon is exactly 1 year away (February 15, 2020) today.

Using the answers above, calculate what will happen to the price of the bond when interest rates fall 75 bp (.75%) and 150 bp (1.5%). Use duration rule and duration rule + convexity. Which is a better predictor of price change?

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