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2) Duration / Interest Rate Risk: a. Estimate the percent change in the market value (or price) of this bond in this situation (make sure

2) Duration / Interest Rate Risk: a. Estimate the percent change in the market value (or price) of this bond in this situation (make sure you calculate the direction and magnitude of this change) I. $1,000 par, $980 market value, 5% coupon, 8% yield, 8.5 year duration, 10-years to Maturity II. Yields on the bond change from 8% to 7.50% 3) Using the Example above, what is the bond's actual market value? (the $980 above is incorrect)

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