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  3. 5. a 5-year, 8% (annual coupon payment) bond is tr

5. A 5-year, 8% (annual coupon payment) bond is trading to yield 7%, calculate or...

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Finance

5. A 5-year, 8% (annual coupon payment) bond is trading to yield 7%, calculate or approximate the percentage price change using the conventional approach and the duration/convexity approach if yield decreases by 100 bps to 6%. Note, this question requires the calculation of Using the conventional valuation approach for the percentage price change (2 points) Duration or modified duration; (4 points) Convexity or dollar convexity (4 points) The percentage price change using both the duration measure and convexity measure. (2 points)

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