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There is a bond which has a duration of 7 and a convexity of 40. a) If the bond increases by 3 %, what will

There is a bond which has a duration of 7 and a convexity of 40.

a) If the bond increases by 3 %, what will its price alter by?

b) If it decreases by 3%, what will the alteration of price be?

c) How do the results compare with the actual ones? Discuss without derivations. Are the true results symmetric in the 2 cases?

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