Estimated percentage change in the bond price

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Calculate the duration for a $1,000, 4 year bond with a 6% annual coupon, currently selling at par. Use the duration to estimate the percentage change in the bond's price for a decrease i the market interest rate to 4%. Use the bond price volatitilty equation to compute the bond price volatility. Compare the result with the estimated percentage change in the bond price.

Reference no: EM132000850

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