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An 6% annual coupon 20-year bond is selling at 8% YTM. Its current price is $897.26 and its Macaulay Duration is 11.37 years. a) Estimate

An 6% annual coupon 20-year bond is selling at 8% YTM. Its current price is $897.26 and its Macaulay Duration is 11.37 years.

a) Estimate the percentage change in the bond price if the YTM drops to 7.8% based on Macaulay Duration.

b) Estimate the change in the bond price.

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