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A corporate bond with 6.75 percent coupon has ten years left tomaturity. It has had a credit rating of BB and a yield to maturityof 8.2 percent. The firm has recently become more financiallystable and the rating agency is upgrading the bonds to BBB. The newappropriate discount rate will be 7.1 percent. What will be thechange in the bond's price in dollars and percentage terms? (Assumeinterest payments are semiannual).
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