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1 . Firm Z issued 1 6 - year bonds 6 years ago at a coupon rate of 8 . 1 8 percent. The bonds

 
1.Firm Z issued 16-year bonds 6 years ago at a coupon rate of 8.18 percent. The bonds make semiannual payments. If the YTM on these bonds is 6.1 percent, what is the current bond price? Answer to two decimals.
2. Suppose the real rate is 2.02 percent and the inflation rate is 1.99 percent. What rate would you expect to earn on a Treasury bill? Use exact formula and answer in percent to two decimals.

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1 To calculate the current bond price we can use the present value formula for a bond P C1 rn C1 rn1 ... blur-text-image

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