Consider a 5 percent coupon bond with seven years to


Consider a 5 percent coupon bond with seven years to maturity and a current price of $1,050.70. Suppose the yield on the bond suddenly increases by 2 percent.

a. Use duration to estimate the new price of the bond.

b. Calculate the new bond price.

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Financial Management: Consider a 5 percent coupon bond with seven years to
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