We predict that if market yields decrease by 100 basis


It is November 1, 2017. You have a $10,000 semi-annual bond with a coupon rate of 1.750% which matures October 15, 2038. The bond is priced to yield 7.125%, the duration is 15.21 years, and the convexity is 274.08 years squared.

Using a duration estimate only, we predict that if market yields decrease by 100 basis points then the price of this bond will increase by .........

The convexity correction is calculated as .....

So the total increase in price is predicted to be ......

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Financial Management: We predict that if market yields decrease by 100 basis
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