A 4 years Treasury Bond with a face value of $1,000 and annual coupon rate of 5,80% has a yield to maturity of 4,29%. This bond makes 2 (semi-annual) coupon payments per year and thus has 8 periods until maturity. Use Excel spreadsheet.

1. What is the price sensitivity of a bond to changes in yield and how does that compare to the duration approximation, and compare to the duration plus convexity approximation?

2. Include a brief written component addressing the comparisons in the question.

3. Include in your discussion your interpretation of your findings.