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Below are details of a semiannual bond. Par value = 1000; Maturity 4 years; Market rate if interest (yield to Maturity) = 11% per annum;

Below are details of a semiannual bond.

Par value = 1000; Maturity 4 years; Market rate if interest (yield to Maturity) = 11% per annum; Coupon rate = 8% per year paid semiannually.

Which one is a better measure of predicting price change--duration or convexity-- and why?

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