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Problem 10-24 Using Duration (LO4, CFA6) Consider a bond with a coupon of 7.6 percent, seven years to maturity, and a current price of $1,032.20.

Problem 10-24 Using Duration (LO4, CFA6)

Consider a bond with a coupon of 7.6 percent, seven years to maturity, and a current price of $1,032.20. 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. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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