Assume: 1-year spot rate is 7.50%, 2-year spot rate is 7.75%. 3-year spot rate is 8.10%, 4-year spot rate is 8.45%, and 5- year spot rate is 8.60%. The expected 1-year forward rate 1 20 year from now should be 1 2 3 7.50% 7.75% 8.10% 8.45% 8.60% 1 year spot rate 3 years from today? 21 22 23 24 25 26 27 28 29 4 5 A 25-year maturity coupon bond is currently selling for $925. The yield to maturity is 10%. The bond has a duration of 10 years and a convexity of 125. If the interest rate were to fall 140 basis points, your predicted new price for the boud 30 (including convexity) is_ 31 32 33 % Change in Bond PRice = -Dur. AY (147) Convexity