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Calculate by hand the using the correct formula duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest
Calculate by hand the using the correct formula duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%.
Consider the bond in the previous question. Calculate by hand using the correct formula the expected price change if interest rates drop to 6.75% using the duration approximation. Calculate the actual price change using discounted cash flow.
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