The duration of a 10-year bond, with a coupon rate of 10% and a price of $1,000, is 6.76 years when the interest rate is 10% per annum. What happens to the price of the bond if the interest rate falls to 7.5% per annum? Based on the duration, the estimated new price will approximately be:

a.

$75

b.

$1154

c.

$831

d.

$846

e.

$1169