If the prevailing interest rates for  instruments of similar risk and maturity were to increase from 5% to 10% next week, what would happen to the value of your bond in the secondary market? Explain.

Assume that today you purchased a Treasury Note with the following characteristics:

Par (face) value = $1,000

Maturity = five years from today

Coupon interest rate =5%

ALL OTHER THINGS BEING EQUAL: 

If the prevailing interest rates for  instruments of similar risk and maturity were to increase from 5% to 10% next week, what would happen to the value of your bond in the secondary market? Explain.

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