medium · Quantitative Finance

A bond with a face value of 100, currently priced at95, has a duration D = 8 and a convexity C = 70.

If market yields decrease by 50 basis points (0.005), what is the estimated new price of the bond?

  1. 98.80
  2. 99.13
  3. 98.88
  4. 91.20

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