A 30-year maturity bond making annual coupon payments with a coupon rate of 15.3

Question

A 30-year maturity bond making annual coupon payments with a coupon rate of 15.3% has duration of 10.59 years and convexity of 163.0. The bond currently sells at a yield to maturity of 9%. a. Find the price of the bond if its yield to maturity falls to 8% or rises to 10%. {Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? {Do not round intermediate calculations. Round your answers to 2 decimal places.)

Explanation / Answer

Answer:a

YTM Price 8% 1821.82 10% 1499.63

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