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If the market interest rates decrease by .5% per year (i.e. YTM becomes 6.5%). Use duration formula to find how such interest rate change will

If the market interest rates decrease by .5% per year (i.e. YTM becomes 6.5%). Use duration formula to find how such interest rate change will affect the bond price?

  1. Find the new bond price using a financial calculator.
  2. Compare actual and duration predicted bond price changes.
  3. Which change is larger? What role does bond price convexity play here?

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