A $1000 par value bond with 7% annual coupons maturing at par in 4 years sells at a price to yield 6% effective. If the interest rate decreases to 5.77%, Find the difference between the estimate of the new price using the first-order modified approximation and the estimate of the new price using the first- order Macaulay approximation. Possible Answers A .02 В .03 C .06 D .05 E .04

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A:

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