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Question
A bond is selling in the market for $1,100 and has a duration of 4.5 years. Market interest rates are 5 percent and are expected to increase to 7 percent in the near future. What will this bond's price be after the change in market interest rates?
A. $1,006
B. $1,194
C. $1,122
D. $1,078
E. $1,100
Answer
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