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You are a fixed income investor and you decide to buy a 30-year maturity bond making annual coupon payments with a coupon rate of 5%.
You are a fixed income investor and you decide to buy a 30-year maturity bond making annual coupon payments with a coupon rate of 5%. You search for the bond on your Bloomberg Terminal and find that it has a convexity of 192.4 and a duration of 16.67. The bond currently sells at a yield to maturity of 4.5%. If yields fall to 4%, what is the approximate % change in prices?
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