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A 30-year maturity bond making annual coupon payments with a coupon rate of 7.2% has duration of 13.21 years and convexity of 247.25. The bond
A 30-year maturity bond making annual coupon payments with a coupon rate of 7.2% has duration of 13.21 years and convexity of 247.25. The bond currently sells at a yield to maturity of 7%. a. Find the price of the bond if its yield to maturity falls to 6%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Price of the bond $ 1,024.82 b. What price would be predicted by the duration rule? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Predicted new price (duration $ 1,165.18 rule) c. What price would be predicted by the duration-with-convexity rule? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Predicted new price (duration-with-convexity rule) 1,151.34
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