Question: How does the FED raise interest rates (steps they take so that market interest rates increase)? How do investors react (positive/negative) to a raise in

  1. How does the FED raise interest rates (steps they take so that market interest rates increase)?
  2. How do investors react (positive/negative) to a raise in interest rates by the FED?
  3. Suppose you know only coupon rate and the required rate of return of a bond. Can you say whether it is issued at discount, premium, or per value? Explain.
  4. (True/False. Explain) Bond price approaches face value as maturity decreases, other things held constant.
  5. What type of bond specific risks (price vs reinvestment) do the investors face when interest rates keep going down?

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