A $$1,000$ par value, $10-$year bond, with a $10\%$ annual coupon and a yield to maturity of $7\%$

has a duration of $7\mathrm{.}068$ years. If rates are expected to increase by $50$ basis points

$(+0\mathrm{.}50\%)$ to $7\mathrm{.}5\%,$ the predicted $ change in the bond's price is

$[$Hint:

use the duration approximation formula$].$ The actual change in the bond's price if rates

increase to $7\mathrm{.}5\%$ is

$[$Hint: first compute the new price of the bond using a

$7\mathrm{.}5\%$ yield$]?$

Multiple Choice

$-$$$39\mathrm{.}99$;$-$$$39\mathrm{.}99$

$-$$$39\mathrm{.}99$;$-$$$39\mathrm{.}11$

$-$$$100$;$-$$$99$

$-$$$39\mathrm{.}11$; $-$ $$39\mathrm{.}39$