You have a 25-year maturity, 10% coupon , 10% yield bond with a duration of 10 years and a convexity of 135.5. If the interest rate were to fall 125 basis points, your predicted new price for the bond (including convexity) is : please include all relevant HP12C calculations
Bond valuation determines the present value of a bond's future cash flows, which include the principal repayment at maturity and monthly interest payments. This approach assists investors in determining if a bond is priced attractive in relation to its future returns while allowing issuers to make informed decisions regarding coupon rates and terms to offer. It is a fundamental tool for evaluating investment opportunities and making strategic financial decisions.
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