Multiple Choice
Consider a bond selling at par with modified duration of 10.6 years and convexity of 210. A 2% decrease in yield would cause the price to increase by 21.2% according to the duration rule. What would be the percentage price change according to the duration-with-convexity rule?
A) 21.2%
B) 25.4%
C) 17.0%
D) 10.6%
Correct Answer:
Verified
Correct Answer:
Verified
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