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    Issuance of new bonds

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    If the Treasury announces plans to issue $50B of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?

    Would prices and interest rates both decline?

    Would prices and interest rates both rise?

    Would prices rise and interest rates decline?

    Would prices decline and interest rates rise?

    There would be no change?

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    Would prices decline and interest rates rise?

    Since new bonds ...

    Solution Summary

    The solution helps explore financial concepts such as bond prices and interest rates.

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