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Use Macauly's Duration Price Approximation formula for this. Before a change in interest rates, your bond has the following characteristics: present value of $5,557.56,
Use Macauly's Duration Price Approximation formula for this. Before a change in interest rates, your bond has the following characteristics: present value of $5,557.56, Duration of 3.69 years with market interest rates of 5%. Calculate the percentage change in the bond's price if market rates fall to 4.85%. Be sure to include the negative sign IF you think the price goes down.
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