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Write the formula for the change in the bond price

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Reference no: EM132497909

A bond has a duration of 6 years and interest rates are currently 7%. The Fed is expected to increase interest rates by 24 basis points, use duration to determine the change in the bond price.

a) Write the formula for the change in the bond price using duration.

b) Use the formula in a) to determine the percentage change in the bond price due to the interest rate increase.

Reference no: EM132497909

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