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1) A coupon bond that pays interest of 7% annually has a par value of $1,000, matures in 3 years, and is selling today at
1) A coupon bond that pays interest of 7% annually has a par value of $1,000, matures in 3 years, and is selling today at $957. What is the effective rate of return you will earn on this bond if you are able to reinvest your coupon payments at the following rates: Year 1: 8.2%; Year 2: 8.0%.
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