MonkeyBusiness

A few points as I see it.

- There was a 200 bp change in the yield
-For large bp changes, duration is a crap measure, hence why the convexity adjustment is necessary
-Just because convexity isn't given, doesn't mean it doesn't exist
-It is an option free bond, so therefore convexity is always positive
-It was an increase in yield of 200 bp, that means a decrease in price
-Duration is -4, but convexity is positive by rule
-Therefore the actual price change will be less than 4%.
-It isn't necessary for the CFA to trick us as the latest posts are thinking. Just look- using the question honestly is sparking a huge debate.