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reinvestment rate risk Karen needs $1,000,000 to retire in five years. There is a 5-year annual coupon bond that has a YTM of 9% and
reinvestment rate risk
Karen needs $1,000,000 to retire in five years. There is a 5-year annual coupon bond that has a YTM of 9% and sells at par.
- If Karen buys the bond and the YTM moves to 7% before the first coupon payment, how much money will Karen have for retirement?
- If Karen buys the bond and the YTM moves to 11% before the first coupon payment, how much money will Karen have for retirement?
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