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Question 1 20 pts Assume you buy a bond with the following features Bond maturity = 6 Coupon Rate = 7.00% Face Value = $1,000

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Question 1 20 pts Assume you buy a bond with the following features Bond maturity = 6 Coupon Rate = 7.00% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 7.00% Immediately after you buy the bond the interest rate changes to 6.50% What is the "price risk" effect in year 3? 0 -$13.64 $13.24 0-$13.24 O $13.64 $12.85 0-$12.85 Question 1 20 pts Assume you buy a bond with the following features Bond maturity = 6 Coupon Rate = 7.00% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 7.00% Immediately after you buy the bond the interest rate changes to 6.50% What is the "price risk" effect in year 3? 0 -$13.64 $13.24 0-$13.24 O $13.64 $12.85 0-$12.85

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