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Consider a bond being sold in the primary market with the following characteristics: currently priced at $1,000 which has 3 years to maturity, a 6%
Consider a bond being sold in the primary market with the following characteristics: currently priced at $1,000 which has 3 years to maturity, a 6% annual coupon rate, and a face value of $1,000 at maturity. Suppose that one year after you buy the bond, the interest rate increases 3% from the interest rate last year. If you decide to sell the bond then, what is your rate of return? Please show work with formulas, not Excel.
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