A 30-year maturity bond making annual coupon payments with a coupon rate of 14.3% has duration of 11.34 years and convexity of 185.7. The bond currently sells at a yield to maturity of 8%.

e-1. Find the price of the bond if it's yield to maturity rises to 9%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

e-2. What price would be predicted by the duration rule, if it's yield to maturity rises to 9%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

e-3. What price would be predicted by the duration-with-convexity rule, if it's yield to maturity rises to 9%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

e-4. What is the percent error for each rule? (Do not round intermediate calculations. Round "Duration Rule" to 2 decimal places and "Duration-with-Convexity Rule" to 3 decimal places.)

e-5. Are your conclusions about the accuracy of the two rules consistent with parts (a) (d)?

multiple choice 2

• Yes

• No