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This is the beginning of 2020 and you hold a bond maturing at the end of 2024 with a coupon of $50, paid at the
This is the beginning of 2020 and you hold a bond maturing at the end of 2024 with a coupon of $50, paid at the end of each year. The face value of the bond is $1,000. The current yield to maturity of the bond is 4%.
a. What is the duration of the bond?
b. Suppose that the yield on the bond increased (at the beginning of 2020) from 4% to 4.1%. By what percentage would the price of the bond likely to decline?
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