Bond Price Change Estimation - Quant Trader Interview Question
Difficulty: Medium
Category: Mental Math & Estimation
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Topics: bond, duration, convexity, mental-math, fixed-income
Problem Description
A bond portfolio manager holds a portfolio with a modified duration of 7 and convexity of 50. If yields rise by 50 basis points (0.5%), estimate the approximate percentage change in the portfolio's price using duration and convexity adjustments.
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