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Suppose a bond is sold for $1,000 and pays an annual interest rate of 10% on the par value, which is also $1,000. The bond
Suppose a bond is sold for $1,000 and pays an annual interest rate of 10% on the par value, which is also $1,000. The bond was issued 20 years ago and will mature in one week. You own some of these bonds. The market rate suddenly goes way up, to 15%. Calculate your loss. Explain your results.
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