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Suppose you paid $1,000 for a perpetuity bond that pays $40 a year forever to the bondholder. Now suppose that due to aggressive policy by

Suppose you paid $1,000 for a perpetuity bond that pays $40 a year forever to the bondholder. Now suppose that due to aggressive policy by the Fed, general interest rates fall from 4% to 1%. What would be the price of the bond if it continues to pay $40 per year?

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