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A bond has 10 years remaining until maturity, a YTM of 5% and a duration of 6.5. The cash rate is 3%. You are expecting
A bond has 10 years remaining until maturity, a YTM of 5% and a duration of 6.5. The cash rate is 3%. You are expecting that over the next year the market yield will go down by 40 basis points. For this period, estimate the following: The bonds expected price change, your expected return and the bond's risk premium. Show all the calculations thoroughly.
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