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Bond FV = $3,000 Coupon = 6% Current Yield = 6% Maturity = 4 years Current Yield predicted to increase by 200 bp. Required: a.

Bond FV = $3,000 Coupon = 6% Current Yield = 6% Maturity = 4 years Current Yield predicted to increase by 200 bp.

Required:

a. Calculate price of the bond using bond pricing formula factoring the increase in yield.

b. Calculate price of the bond using duration and after adjusting for change in yield.

c. Adjust for convexity and recalculate the price.

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