Question: As interest rates increase and decrease, bondholders experience capital gains and losses and changes in the future value of reinvestment income. Thus, bond yields are

As interest rates increase and decrease, bondholders experience capital gains and losses and changes in the future value of reinvestment income. Thus, bond yields are subject to interest rate risk even when coupon and principal payments are paid as promised. Discuss the six bond pricing rules as presented in the text.

What is the major determinant of interest rate risk. Why?

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