A 30-year maturity bond making annual coupon payments with a coupon rate of 11.5% has duration of 10.88 years and convexity of 172.2. The bond currently sells at a yield to maturity of 9%.

a.	Find the price of the bond if its yield to maturity falls to 8% or rises to 10%. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Yield to maturity of 8%	$
Yield to maturity of 10%	$

b.	What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

	Duration Rule	Duration-with- convexity Rule
YTM falls to 8%	$	$
YTM increases to 10%	$	$

c.	What is the percentage error for each rule? (Negative answers should be indicated by a minus sign. Round your answers to 2 decimal places. Omit the "%" sign in your response.)

	Duration Rule	Duration-with- convexity Rule
Percent error for 8% YTM	%	%
Percent error for 10% YTM	%	%

d.

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.