C. The current rate of inflation is 11.7 percent, and long-term bonds are yielding 13.6...
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C. The current rate of inflation is 11.7 percent, and long-term bonds are yielding 13.6 decrease percent. You estimate that the rate of inflation will increase to 6 percent. What do you expect to happen to long-term bond yields? Compute the effect of this estimated change in inflation on the price of a 15-year, 10 percent coupon bond with a current yield to maturity of 18 percent
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