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A bond pays coupons annually and has a 1000 par. The maturity is 4 years. The coupon rate is 4.5% and the YTM is 7%.

A bond pays coupons annually and has a 1000 par. The maturity is 4 years. The coupon rate is 4.5% and the YTM is 7%. What happens if the YTM increases by 5%? Match the following answers.

A. -17.46%

B. -15.47%

C. -15.63%

with

Actual Change in Bond Price
Predicted Change in Bond Price based on duration
Predicted Change in Bond Price based on duration and convexity

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