A $1000 par value bond with 7% annual coupons maturing at par in 4 years...
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Accounting
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 by .26%, the estimate of the new price using the first-order modified approximation is P1P1. If the interest rate increases by .23%, the estimate of the new price using the first-order Macaulay approximation is P2P2.
Which of the following answers is closest to the difference P1P2
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