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A bond is currently priced at 130. The price will change to 140 or 122 if the yield is changed by 50bp or .5% on

A bond is currently priced at 130. The price will change to 140 or 122 if the yield is changed by 50bp or .5% on either the upside or on the downside. a) Calculate the modified duration using the two point approach. b) Estimate the dollar price of the bond if interest rate rises by 2%. (if par =1,000)

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