If a bond has duration of 12.25 years, and interest rates are expected to decline by 1.5 percent, what is the expected percentage change in the value of the bond? Show and briefly explain the rationale for your work.
If a bond has duration of 16.875 years, and interest rates are expected to increase by 0.75 percent, what is the expected change in the value of the bond? Show and briefly explain the rationale for your work.