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A 30-year maturity bond making annual coupon payments with a coupon rate of 10% has duration of 10.37 years and convexity of 157.28. The bond

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A 30-year maturity bond making annual coupon payments with a coupon rate of 10% has duration of 10.37 years and convexity of 157.28. The bond currently sells at a yield to maturity of 10%. a. Find the price of the bond if its yield to maturity falls to 9%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price of the bond $ 1.102.74 b. What price would be predicted by the duration rule? (Do not round intermediate calculations, Round your answers to 2 decimal places.) Predicted new price (duration 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.) Predicted new price (duration-with-convexity rule) d-1. What is the percent error for each rule? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Duration Rule Duration with Convexity Rule % Percentage error d-2. What do you conclude about the accuracy of the two rules? The duration-with-convexity rule provides more accurate approximations to the true change in price. The duration rule provides more accurate approximations to the true change in price. e-1. Find the price of the bond if its yield to maturity increases to 11% (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price of the bond e-2. What price would be predicted by the duration rule? (Do not round intermediate calculations. Round your answers to 2 decimal places.) e-3. What price would be predicted by the duration-with-convexity rule? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Predicted new price (duration-with-convexity rule) e-4. What is the percent error for each rule? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Duration Rule Duration-with- Convexity Rule 96 Percentage error 96 e-5. Are your conclusions about the accuracy of the two rules consistent with parts (a) - (d)? Yes O NO

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