Question 2 Consider a 40-year maturity UK government bond. This bond has a 1.75% coupon interest rate, a semi-annual coupon payment frequency, a par value of 100, a price of 93.139 and a 2.00% yield. This bond also has a duration of 28.12 and a convexity of 1010.4 a) Use the given duration to estimate the percent change in the price of this bond when the yield is increased by 100 basis points to 3.0%. What do you observe about this result?4 b) Now use the Taylor series approximation to estimate the percent change in the price of this bond when the yield is increased by 100 basis points to 3.0%. What do you observe about this result?H For both a) and b) you are required to explain your answers clearly. Question 2 Consider a 40-year maturity UK government bond. This bond has a 1.75% coupon interest rate, a semi-annual coupon payment frequency, a par value of 100, a price of 93.139 and a 2.00% yield. This bond also has a duration of 28.12 and a convexity of 1010.4 a) Use the given duration to estimate the percent change in the price of this bond when the yield is increased by 100 basis points to 3.0%. What do you observe about this result?4 b) Now use the Taylor series approximation to estimate the percent change in the price of this bond when the yield is increased by 100 basis points to 3.0%. What do you observe about this result?H For both a) and b) you are required to explain your answers clearly