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Suppose you have a 2-year bond with a coupon rate of 5% and a yield to maturity of 6%. This bonds current price is 981.67,
Suppose you have a 2-year bond with a coupon rate of 5% and a yield to maturity of 6%. This bonds current price is 981.67, and its Macaulay duration is 1.952 years. What is your bonds convexity? What is the expected price change if yield to maturity goes up to 8% (use the convexity augmented formula)?
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