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Question
A bond that pays interest annually has a 6% promised yield and a price of $1025. Annual interest rates are now projected to fall 50 basis points. The bond's duration is 6 years. What is the predicted new bond price after the interest rate change? (Watch your rounding.)
A. $1042.33
B. $995.99
C. $1054.01
D. $987.44
E. None of the above
Answer
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