Question: TUL Adobe PDF Signatures Problem 3 (24 points) A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of

TUL Adobe PDF Signatures Problem 3 (24 points) A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond currently sells at a yield to maturity of 8%. A. Use a financial calculator or spreadsheet to find the price of the bond if its yield to maturity falls to 7%. (6 points) 1 B. What bond price would be predicted by the duration-with-convexity rule if its yield to maturity falls to 7%? (12 points) 4

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