Consider a 7.8 percent coupon bond with eight years to maturity and a current price of $1,034.50. Suppose the yield on the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Price $___________________________
b. Calculate the new bond price. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Price $___________________________