What is the modified duration of this bond

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Reference no: EM131947348

Question: A bond has a face value of $1,000 and a coupon rate of 3%. Interest is paid semi-annually. This bond matures in 3 years. Current market interest rates are 4%.

What is the modified duration of this bond?

If interest rate decrease 1%, what is the new bond price as predicted by modified duration?

Reference no: EM131947348

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