Can anyone explain the answer? Practice Question Suppose you're looking...
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Can anyone explain the answer?
Practice Question Suppose you're looking at a US treasury bond with a Face Value of $1,000 and a coupon rate of 5%, with 10 years left to maturity It pays interest semiannually (or twice per year), like most treasury bonds. If NEW 10 year treasury bonds are being issued with a 2% coupon today, what price should this bond be trading at today? .Why is the price different than the Face Value of the Bond? What do you think will happen to the price of this bond if people expect inflation to increase? What would happen if people started worrying that the US couldn't (or wouldn't) pay its debts
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