Question: 14. a. Using the duration computed in question 11a, compute the approximate percentage price change using duration for the two 8% coupon bonds assuming that

14.

a. Using the duration computed in question 11a, compute the approximate percentage price change using duration for the two 8% coupon bonds assuming that the yield changes by 200 basis points (y∗ = 0.02).

b. How does the estimated percentage price change compare to the actual percentage price change?

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