A bond has an annual modified duration of 6.802. Calculate expected percentage price change if the bonds yield-to-maturity decreases by 40 basis points. Problem 2 The bond in problem 1 above has an annual convexity of 143. a. What is the convexity effect (i.e., the effect on the change in price due to the convexity alone) for bonds yield-to-maturity decrease of 40 basis points? b. What is the improved estimate of the percentage price change of the bond, considering the convexity as well as the modified duration