. Looking at the figure below, you wil notice that the quadratic approximation curve of the bond's value lies between the bond's value curve and the tangent line to the left of the tangency point and outside (above) these lines to the right of the tangency point. The fact that a quadratic (and hence "better") approximation behaves like this is not intuitive: we would tend to think that a "better approximation" would always lie between the exact value curve and its linear approximation How can you explain this apparently non-intuitive result? 2000 Bond's value 1500 Quadratic approximation 1000 500 Linear approximation 01234567 89 10 11 12 13 14 15 16 17 18 19 20 Rate of interest (in percent)