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You recently started your job as adviser for the European Central Bank (ECB). As your first task, your supervisor asks you to approximate how the
You recently started your job as adviser for the European Central Bank (ECB). As your first task, your supervisor asks you to approximate how the value of all outstanding government and corporate bonds denominated in Euro would change (in percentage terms) if the ECB would suddenly and unexpectedly increase the central bank rate by 150 basis points. What is your answer?
Briefly explain your assumptions, the calculation, and the sources that you used!
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