Bond Duration and Convexity

A 3-year maturity bond making annual coupon payments with a coupon rate of 10% and a par value of $1,000. Suppose that the bond is currently selling at par.

a. What will be the modified duration and the convexity of the bond, given the above market information?

b. If the yield to maturity suddenly falls by 100 basis points, what prices for the bond would be predicted by the duration rule and the duration-with-convexity rule, respectively?

c. What will be the actual price given that the yield to maturity suddenly falls by 100 basis points?