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5. In reaction to the coronavirus, the Federal Reserve Bank decreased the Fed Funds rate by 0.25% Suppose Italian shoe company Perrone, Inc., issued bonds
5. In reaction to the coronavirus, the Federal Reserve Bank decreased the Fed Funds rate by 0.25% Suppose Italian shoe company Perrone, Inc., issued bonds at par with par value of $100 million; an annually paid coupon of 5.5%; and 20 years to maturity. a. Assuming the bond's required rate of return decreased the full 0.25%, how much money did the bond's investors lose/gain due to the interest rate change? b. Use the Fed's rate reduction to calculate the elasticity of this bond issue
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