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Please show me the formula then solve the question. If the answer is right you will get thumbs up, if wrong thumbs down. So don’t answer till you are 100 percent sure.
Consider the bond that has a duration of 3 years. Calculate the expected percentage change in price if interest rates drop from 7% to 675% using the duration approximation. 1.
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Answer #1

Bond Price Change=(Duration×Yield Change*100
Since here given the interest rate drop from 7% to 6% thr bond price change is positive since the interest rate and bond price are inversely proportional to each other.
Bond price change=3*(7%-6.75%)*100
=0.75%

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