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You invested $500 in a 3% bond with a modified duration of 8.53 years and convexity equal to 87.07. Calculate the predicted change in value

You invested $500 in a 3% bond with a modified duration of 8.53 years and convexity equal to 87.07. Calculate the predicted change in value of the bond as a percentage change and the predicted value of the bond based on convexity if interest rates were to decrease by 100 basis points (from current 3.0% rate to 2.0%).

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Given Data 1 Initial investment 500 2 Modified duration Dmod 853 years 3 Convexity C 8707 4 Change i... blur-text-image

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