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Calculate the new bond price using the usual bond pricing

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Reference no: EM132782997

Question - Consider a bond with a coupon of 7.2 percent, five years to maturity, and a current price of $1,027.60. Suppose the yield on the bond suddenly increases by 2 percent.

Required -

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

b. Calculate the new bond price using the usual bond pricing formula.

Reference no: EM132782997

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