You recently started your job as adviser for the European Central Bank (ECB). As your first task, your supervisor asks you to approximatehow the value of all outstanding government and corporate bonds denominatedin Euro would change (in percentage terms) if the ECB would suddenly and unexpectedly increase thecentral bank rate by 150 basis points. What is your answer?

Briefly explain your assumptions, the calculation, andthe sources that you used!

[20 points; do not use more than 200 words for your answer]