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2) You find bond A priced to yield 6%, and a similar-risk bond B priced to yield 6.5%. If you expect the interest rates to
2) You find bond A priced to yield 6%, and a similar-risk bond B priced to yield 6.5%. If you expect the interest rates to rise, what will happen to the prices of the two bonds (increase or fall)? In terms of price change, which bond's price is expected to increase or fall more, and which bond's price is expected to increase or fall less? (6=3+3 marks)
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