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Suppose you buy a 7 percent coupon, 20-year bond today when it’s first issued. If interest rates suddenly rise to 15 percent, what hap-pens to the value of your bond? Why?

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Answer:

INTERPRETING Bond Yields. Suppose you buy a 7 percent COUPON, 20-year bond today when it's first issued. If interest rates suddenly RISE to 15 percent, what happens to the value of your bond? ... The bonds make ANNUAL payments.

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