Use the two-term approximation:

$$\Delta P \approx -D\,P\,\Delta y + \frac{1}{2}C\,P\,(\Delta y)^2$$

From the previous questions:

• $P \approx 94.182$
• $D \approx 2.88$
• $C \approx 8.49$
• $\Delta y = -0.01$ for a 100 bp drop

So:

$$\Delta P \approx -2.88(94.182)(-0.01) + \frac{1}{2}(8.49)(94.182)(0.01)^2$$ $$\Delta P \approx 2.711 + 0.040 \approx 2.75$$

So the estimated price increase is approximately +$2.75, which is C.