3.There are 3 explanations of the shape of the yield curve.(term structure of interest rates.)

4 There is a bond, which has a duration of 7 and a convexity of 40. Compute exact and approximate prices.

a) If the bond increases by 3 %, what will its price alter by?

b) If it decreases by 3%, what will the alteration of price be?

c) Discuss without derivations. Are the true results symmetric in the 2 cases?

Please show all work!