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Question
A bond that pays interest semiannually has a 6% promised yield and a price of $1045. Annual interest rates are now projected to increase 50 basis points. The bond's duration is 5 years. What is the predicted new bond price after the interest rate change? (Watch your rounding.)
A. $1020.35
B. $1069.65
C. $1070.36
D. $1019.64
E. None of the above
Answer
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