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An investor is considering purchasing a Treasury bond with a 3-year maturity, a 6% coupon and a 7% required rate of return. The bond pays

An investor is considering purchasing a Treasury bond with a 3-year maturity, a 6% coupon and a 7% required rate of return. The bond pays interest semiannually.

1. What is the bond's modified duration?

2. If annual required return decrease 30 basis points immediately after the purchase, what is the predicted price change in dollars based on the bond's duration?

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