Using the modified bond duration of 2.486 years, if you anticipate bond ylelds will increase by 1.3 percentage points, then the price of the bond will decrease by: 2.651 percent 2.941 percent 3.232 percent 3.393 percent Now suppose bond yields increase by 1.3 percentage points as expected (from 9 percent to 10.3 percent), such that the new price of the bond will be 5967,84 Using the traditional percentage change formula, the new price of the bond reflects a decrease in the price of the bond by , from which it can be seen that if an investor relies on modified duration to estimate the percentage change in the price of a bond, they will tend to the price decrease associated with an increase in rates