A 10-year maturity bond making annual coupon payments with a coupon rate of 3% has modified duration of 8.52 years and convexity of 393.7. The bond currently trades at a yield to maturity of 2.5%.

a) If the bond's yield were to fall by 25 basis points, what price would be predicted using duration only?

b) If the bond's yield were to fall by 25 basis points, what price would be predicted using duration and convexity? .