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An annual corporate bond is priced to yield 7.5% annually and has a price of $972.18. Its Macaulay duration is 5.8215. If the rate decreases
An annual corporate bond is priced to yield 7.5% annually and has a price of $972.18. Its Macaulay duration is 5.8215. If the rate decreases to 7.4%, estimate the price of the bond using
(a) first-order modified approximation;
(b) first-order Macaulay approximation.
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