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The following three questions refer to the following information: Calculate the price of a $1,000, 6% bond with three years to maturity with 6.5% market
The following three questions refer to the following information:
Calculate the price of a $1,000, 6% bond with three years to maturity with 6.5% market interest rates. Assume annual coupon payments.
What is the duration of this bond?
Using the duration price approximation formula, calculate the expected price change in % if interest rates rise to 7.0%. If your answer is negative, don't forget the sign!
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