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Explain why price of bond must be lower if the yield to maturity increases? What is the Fisher effect? Suppose that you have just bought

  1. Explain why price of bond must be lower if the yield to maturity increases?
  2. What is the Fisher effect?
  3. Suppose that you have just bought a four-year, RM10, 000 coupon bond with a coupon rate of 7% when the market interest rate is 7%.Immediately after you buy the bond, the market interest rate falls to 5%. What happens to the value of your bond?

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