Combining duration and convexity
Now let's combine everything you have learned in the last few chapters by using both duration and convexity to predict bond price changes. Take a 7 year bond that pays an annual coupon of 3% and has a yield to maturity of 4%.
numpy_financial has already been imported for you as npf.
This exercise is part of the course
Bond Valuation and Analysis in Python
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Find the price of 7 year bond with 3% coupon and 4% yield, shift yields and reprice
price = ____
price_up = ____
price_down = ____