Consider a bond with a current price of $98 320,a duration measure of 2 and a convexity measure of 3.5.The approximate dollar change in price predicted from proportional change in 1 plus the yield (i.e.(1 + y))of 0.005 is more than $1000.

Question

Quizplus · Accepted Answer

Using equation 6.12,page 178,the percentage change in bond price ² = -0.00991 or 0.991%.The dollar change in the price is $98320 F1F1F1S1F1F1F10 0.00991 = $974.35.Since this is less than $1000,the statement is false.

Consider a Bond with a Current Price of $98 320,a