First, compute the current price of the bond as: FV = 1,000; PMT = 55; N = 10; I/Y = 4.7; CPT → PV = –1,062.68. Then compute the price of the bond if rates rise by 75 basis points to 5.45% as: FV = 1,000; PMT = 55; N = 10; I/Y = 5.45; CPT → PV = –1,003.78. Then compute the price of the bond if rates fall by 75 basis points to 3.95% as: FV = 1,000; PMT = 55; N = 10; I/Y = 3.95; CPT → PV = –1,126.03.

The formula for effective duration is: (V_-–V₊) / (2V₀Δy). Therefore, effective duration is: ($1,126.03 – $1,003.78) / (2 × $1,062.68 × 0.0075) = 7.67.

The formula for the percentage price change is then: –(duration)(Δy). Therefore, the estimated percentage price change using duration is: –(7.67)(0.75%) = –5.75%. The estimated price change is then: (–0.0575)($1,062.68) = –$61.10