Question 7:	For each of the bonds included in Question 3:
	Bond	Coupon	Years to Maturity	Required Yield	Par Amount ($MM)
	A	4%	2	4%	$3.75
	B	4%	6	4%	$4.30
	C	3%	12	5%	$3.75
	D	0.00%	28	6%	$10.00
	(a) Calculate the approximate duration using the shortcut formula by changing yields by 20bp per annum.
	(b) Calculate the approximate convexity using the shortcut formula by changing yields by 20bp per annum.
	(c) If interest rates increase by 100bp, will the use of duration alone in estimating the price over-estimate or under-estimate the actual price?
	(d) If interest rates decrease by 100bp, will the use of duration alone in estimating the price over-estimate or under-estimate the actual price?
	(e) How can the estimated price using duration alone be improved?