An investment banker agrees to underwrite a $600 million, 10-year, 5 percent annual bond issue for KDO Corporation on a firm commitment basis. The investment banker pays KDO on Thursday and plans to begin a public sale on Friday. What type of interest rate movement does the investment bank fear while holding these securities? If interest rates rise ten basis points, overnight, what will be the impact on the profits of the investment banker? What if the market interest rate falls ten basis points?

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