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When using the duration formula to approximate the dollar change in price of the bond after a change in yields, the calculated change in price
When using the duration formula to approximate the dollar change in price of the bond after a change in yields, the calculated change in price will always be lower than the actual change in price. In other words, the formula will always understate both the amount by which the price is increased following decreases in the yield, and the amount by which the bond price is reduced following yield increases.
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