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A 10-Year maturity bond making annual coupon payments with a coupon rate of 5% and currently selling at a yield to maturity of 4% has
A 10-Year maturity bond making annual coupon payments with a coupon rate of 5% and currently selling at a yield to maturity of 4% has a convexity of 145.4.
Compute the modified duration of the bond.
Based on the information above, compute the approximated new price using the Duration & Convexity adjustment if the yield to maturity increases by 75 basis points.
What is the percentage error?
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