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A noncallable bond with seven years remaining to maturity is trading at 108.1% of a par value of $1,000 and has an 8.5% coupon. If interest rates rise 50 basis points, the bond’s price will fall to 105.3% and if rates fall 50 basis points, the bond’s price will rise to 111.0%. Which of the following is closest to the effective duration of the bond? A. 6.12. B. 5.54. C. 5.27. |