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2. (a) Suppose that you have purchased a 3~year zerocoupon bond with face value of $1000 and a price of $850. If you hold the

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2. (a) Suppose that you have purchased a 3~year zerocoupon bond with face value of $1000 and a price of $850. If you hold the bond to maturity, what is your annual return? (b) Now suppose you have purchased a 3ayear bond with face value of $1000, a 7% annual coupon, and a prioe of $9?5. Is the yield to maturity greater or less than the annual return you computed for the bond in part (a)

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