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Task 3 [20]. Consider a zero-coupon bond with nominal $100 and annual yield of 5%, with one year to maturity. You believe that after one

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Task 3 [20]. Consider a zero-coupon bond with nominal $100 and annual yield of 5%, with one year to maturity. You believe that after one week the yield will change from 5% to 5.5%. Find the expected change in the bond price in three ways: a. Exactly, computing the new price b. Approximately, using the initial duration c. Approximately, using the initial duration and convexity

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