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Medium · Algorithms & Data Structures · Quant Trader interview question · fixed-income, duration, convexity, approximation
You are a bond trader at a major investment bank. You are analyzing a bond with a modified duration of 7 and a convexity of 50. If interest rates increase by 50 basis points (0.5%), what is the approximate percentage change in the bond's price, using the duration-convexity approximation?