Now, in order to find the duration and convexity of a 8% coupon bond making semiannual coupon payments if it has three years until maturity and a yield to maturity of 10%, we conduct calculations in the following table.

Period	Time until payment	Payment	Payment discounted at 5%	weight	Time x weight	Time x Next Time x weight
	(t)	(CFt)	PMT/(1 + y/2)t	(wt = discounted pmt/P)	(t)(wt)	(t)(t+(1/2))(wt)
1	0.5	$40	38.0952	0.0401	0.0201	0.0201
2	1.0	$40	36.2812	0.0382	0.0382	0.0573
3	1.5	$40	34.5535	0.0364	0.0546	0.1092
4	2.0	$40	32.9081	0.0347	0.0693	0.1733
5	2.5	$40	31.3410	0.0330	0.0825	0.2476
6	3.0	$1,040	776.0640	0.8176	2.4527	8.5844
	Column Sums		949.24	1	2.7174	9.1920
				Divide by 1 + y/2	2.5880	8.7542
As you can see in the table the bond price is $949.24, modified duration is 5.5880 years and the convexity is 8.5765. (1) If the bond YTM increases 2% to 12%, what is the percent change in the bond price estimated based on the modified duration rule? (2) If the bond YTM increases 2% to 12%, what is the percent change in the bond price estimated based on the convexity rule? (3) Calculate the actual bond price with 8% semiannual coupon payments, YTM of 12%, and 3 year maturity. What is the actual percent change in the price?