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Consider a bond with a coupon of 5.4 percent, nine years to maturity, and a current price of $1,055.40. Suppose the yield on the bond
Consider a bond with a coupon of 5.4 percent, nine years to maturity, and a current price of $1,055.40. Suppose the yield on the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. Calculate the new bond price using the usual bond pricing formula.
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