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Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you

Assume you buy a bond with the following features

Bond maturity = 4

Coupon Rate = 4%

Face Value = $1,000

Annual Coupons

When you buy the bond the market interest rate = 3.86%

Immediately after you buy the bond the interest rate changes to 7.80%

What is the "reinvestment" effect in year 3 ?

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