The estimated percentage price change is equal to the duration effect plus the convexity effect. The formula is: [–duration × (Δy)] + 1/2×[convexity × (Δy)2]. Therefore, the estimated percentage price change is: [–(5.61)(–0.0075)] + 1/2×[(21.92)(-0.0075)2] = 0.042075 + 0.000617 = 0.043308 = 4.27%.
