Question: Use the Linear Approximation. A bond that pays $10,000 in 6 years is offered for sale at a price P. The percentage yield Y of

Use the Linear Approximation. A bond that pays $10,000 in 6 years is offered for sale at a price P. The percentage yield Y of the bond is

100((' Y = 100 10,000) P 1/6 - 1

Verify that if P = $7500, then Y = 4.91%. Estimate the drop in yield if the price rises to $7700.

100((' Y = 100 10,000) P 1/6 - 1

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