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Calculate the approximate percentage change

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Reference no: EM133034637

You have purchased a bond for R957.90. The bond has a coupon rate of 6.0%, pays interest annually, has a face value of R1 000, 4 years to maturity, and a yield to maturity of 7.25%. The bond's duration is 3.6481 years. You expect that interest rates will decrease by 0.25% later today.

1. Calculate the approximate percentage change in the bond's price using the modified duration.

2. Find the new price of the bond from this calculation.

Reference no: EM133034637

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