1. **State the problem:** We need to find which bond, A or B, has the greater dollar price volatility for a 25 basis point (0.25%) change in interest rates. 2. **Formula used:** The dollar price change (DP) is estimated by the formula: $$DP = - (\text{Modified Duration}) \times P \times \Delta y$$ where $P$ is the price of the bond and $\Delta y$ is the change in yield (interest rate). 3. **Given data:** - Bond A: $P = 1000$, Modified Duration $= 6$ - Bond B: $P = 800$, Modified Duration $= 7$ - Change in yield $\Delta y = 0.25\% = 0.0025$ 4. **Calculate dollar price change for Bond A:** $$DP_A = -6 \times 1000 \times 0.0025 = -15$$ 5. **Calculate dollar price change for Bond B:** $$DP_B = -7 \times 800 \times 0.0025 = -14$$ 6. **Interpretation:** The absolute value of dollar price change represents the price volatility. Bond A has a dollar price change of 15, Bond B has 14. 7. **Conclusion:** Bond A has the greater dollar price volatility for a 25 basis point change in interest rates.