Consider a four-year bond with a 10 coupon paid, Ask an Expert

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Consider a four-year bond with a 10% coupon paid semiannually (or 5 percent paid every 6 months) and an 7% required rate of return. What is the bond price? The bond’s duration is 3.33 years, suppose the rate of return increases by 20 basis points from 7% to 7.2%, calculate the percentage change in bond price? What is the new bond price?

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