The bond has a 30-year maturity, an 8% coupon, and sells at an initial yield to maturity of 8%. Because the coupon rate equals yield to maturity, the bond sells at par value, or $1,000. The modified duration of the bond at its initial yield is 11.26 years, and its convexity is 212.4. If the bond’s yield increases from 8% to 10%, the bond price will fall to $811.46, a decline of 18.85%. 

a.How does the price change according to the duration rule? 

b.How does the price change according to the duration-with-convexity rule?