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A bond maturing in 30 years with coupon rate of 9% was sold at $1,248.18 as the required rate of return was 7%. Like in

A bond maturing in 30 years with coupon rate of 9% was sold at $1,248.18 as the required rate of return was 7%. Like in the previous example, interest rates changed immediately after this to 5%. Estimate the percentage change in the bond price.

A. 2.0%

B. 29.4%

C. 36.67%

D. none of the above.

Answer Key:B

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