1. Assume a 30 year bond, 8% coupon and initial yield to maturity of 8%. The bonds duration is 11.37 years. (What does this mean?)
2. Convexity for this bond is 212.4.(What does this mean?)
3. If yields move from 8% to 10%, how much would you expect the price of this bond to move?
4. What would the price be at the new interest rate?
5. Check your answer by re-valuing the bond at the new yield.