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Consider a Five-Year, 8 Percent Annual Coupon Bond Selling at Par

Question 73

Multiple Choice

Consider a five-year, 8 percent annual coupon bond selling at par of $1,000. If interest rates increase by 20 basis points, what is the approximate change in the market price using the duration approximation?


A) -$7.985
B) -$7.941
C) -$3.990
D) +$3.990
E) +$7.949

Correct Answer:

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