Find the value change of a bond with 3 years maturity, 5.5% coupon, 4% yield to maturity if the interest rate increase or decrease by 50 basis points. Find the 1) actual change. 2) the change estimated by duration method. 3) the duration & convexity approach. Comparing them, what can you tell me about the shortage of duration method.

- Find the value change of a bond with 3 years maturity, 5,5% coupon, 4% yield to maturity if the interest rate increase or decrease by 50 basis points. Find the 1) actual change, 2) the change estimated by duration method, 3) the duration \& convexity approach. Comparing them, what can you tell me about the shortage of duration method