You just bought a bond that will mature in 3 years. The face value of the bond is $1,000. The bond pays annual coupons at 6% coupon rate. The yield to maturity of the bond is 6%.
Suddenly, the interest rates increased, so the new yield to maturity of the bond is now 8%. Assume no time has elapsed since the change in YTM from 6% to 8%, i.e. the change is instantaneous.
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