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Consider a bond with face value $20,000, coupon rate of 10%, and a maturity date 22 years from today. The bond is currently trading at

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Consider a bond with face value $20,000, coupon rate of 10%, and a maturity date 22 years from today. The bond is currently trading at face value. If, one hour from now, the Fed announces an interest rate increase and the bond's required return jumps by 1%, what will happen to the value of the bond? a. Assuming the new YTM for the bond holds, trace bond value, current yield, and capital gains yield over the lifetime of the bond. b. Explain what is happening to the bond value, current yield, and capital gains over time

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