A 30-year maturity bond making annual coupon payments with a coupon rate of 14.5% has duration of 11.32 years and convexity of 185.2. The bond currently sells at a yield to maturity of 8%.

a. Find the exact price of the bond if its yield to maturity falls to 7%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price of the bond $ _________

b. Assume that you need to make a quick approximation using the duration rule (instead of the exact calculation in part a above). What price would be predicted by the duration rule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Predicted price $ _________

c. Assume that you need to make a quick approximation using the duration-with-convexity rule (instead of the exact calculation in part a above). What price would be predicted by the duration-with-convexity rule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Predicted price $ _________

d-1. What is the percent error for each rule? [Hint: percent error is the deviation from the exact price, divided by the exact price. It indicates the extent to which the approximated price differs from the exact price. A smaller percent error indicates more precise approximation.] (Enter your answer as a positive value. Do not round intermediate calculations. Round "Duration Rule" to 2 decimal places and "Duration-with-Convexity Rule" to 3 decimal places.)

Percent Error
YTM	Duration Rule	Duration-With-Convexity Rule
7%	________%	________%

e-1. Find the exact 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.)

Price of the bond $ _________

e-2. What price would be predicted by the duration rule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Predicted price $ _________

e-3. What price would be predicted by the duration-with-convexity rule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Predicted price $ _________

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.)

Percent Error
YTM	Duration Rule	Duration-With-Convexity Rule
9%	________%	________%