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2. (a) A loan A of 1 is made at time 0 in exchange for a capital repayment of 1 at time 1 and interest

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2. (a) A loan A of 1 is made at time 0 in exchange for a capital repayment of 1 at time 1 and interest payments of y at times k/p for 0 sk 00? [8 marks)

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