You are holding a 15-year, 3 percent annual coupon, $1,000 bond that sells at par. A. What will be effect of the bonds new price if the market yield falls by 1%?

B. Calculate the duration and the convexity of this bond when the bond sells at par.

C. What are the predicted bond prices when you use only duration vs when you use both duration and convexity? How large are errors in percentage?