Given the following information on a bond, if the interest rate increases by 1% (that is, from 5% to 6%), what is the change in the price of the bond based on duration?

Current market price = $1050

Duration, D =7.5

Yield to maturity = 5%

Select one:

a. A decrease of $75.00

b. A decrease of $72.78

c. An increase of $75.23

d. An increase of $74.00