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You hold a bond with duration of 15. Its yield is 7% while the cash (one-year) rate is 3%. You expect yields to move down
You hold a bond with duration of 15. Its yield is 7% while the cash (one-year) rate is 3%. You expect yields to move down by 15 basis points over the year. Give a rough estimate of your expected return. What is the risk premium on this bond? Show your work. (6 points)
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