0126.00 Convexity implies that duration predictions. Underestimate the percentage increase in bond price when the...
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0126.00 Convexity implies that duration predictions. Underestimate the percentage increase in bond price when the yield falls... Underestimate the percentage decrease in bond price when the yie IL Overestimate the percentage increase in bond price when the yield falls. Iv. Overestimate the percentage decrease in bond price when the yield rises. () II and only I and Ill only I and IV only 11 and I only 33. You have a 25-year maturity. 10% coupon, 10% yield bond with a duration of 10 years and a convexity of 135.5. If the interest rate were to fall 125 basis polnts, your predicted new price for the bond (including convexity) is 0 $1.12422 $1.098.45 $1.113.41 $1.104.56 34. You have a 15-year maturity, 4% coupon, 6% yield bond with duration of 10.5 years and a convexity of 128.75. The bond is currently priced at $80.76. If the interest rate were to increase 200 basis points, your predicted new price for the band including convexity is 5705.03 5638.85 $666.68
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