Question 3 Bond Duration and Convexity (20 Marks) Steven has a 4-year maturity bond with a coupon rate of 2.5% per annum and a par value of R1000. The bond has a yield to maturity of 3.6% per annum and a convexity of 125.50. Steven is expecting the interest rate to increase by 125 basis points (1.25%), and he would like to know the expected new price for his bond. Using the duration with convexity rule, estimate the predicted new price for Stevens bond.