A.1 The appropriate discount rate for cash flows received one year from today is 10 percent. The

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A.1 The appropriate discount rate for cash flows received one year from today is 10 percent. The appropriate annual discount rate for cash flows received two years from today is 11 percent.

a. What is the price of a two-year bond that pays an annual coupon of 6 percent?

b. What is the yield to maturity of this bond?

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