Suppose that you have a bond with a face value of $1,000 and a coupon rate of
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Suppose that you have a bond with a face value of $1,000 and a coupon rate of 8% for one year and that you buy another one after one year. What will be your gain if the interest rate increases up to 10%? How will your answer change if the interest rate falls to 6%? What conclusion can you draw from these cases?
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If the interest rate increases to 10 The present value of your bond will decrease because you can no...View the full answer
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Related Book For 
Financial Markets And Institutions
ISBN: 9781292215006
9th Global Edition
Authors: Stanley Eakins Frederic Mishkin
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