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you hold a bond with three years to maturity and a yield to maturity of 10% . If the maturity of the bond decreases to
you hold a bond with three years to maturity and a yield to maturity of 10% . If the maturity of the bond decreases to 8%, the duration rule predicts that the price of the bond will increase by 4.9736%. which of the following statement can be true
a) The actual price increase is 4.8681%
b) The actual price increase is 5.0235%
c) The bond is selling at par
d) The bond is a zero-coupon bond
e) None of these is possible.
Please provide answer with working. Thanks.
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