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2. Consider a bond that promises to pay the bond-holder $90 in one year. a) What is the current interest rate on the bond if

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2. Consider a bond that promises to pay the bond-holder $90 in one year. a) What is the current interest rate on the bond if its buying price today is $1500? Show your work. b) Suppose that in the next five years, the market interest rate increases to 8 %. After five years, if the bond-holder decides to sell the bond, at what price would s/he be able to sell it? Show your work. What is the value of the capital gain or capital loss experienced by the bond holder

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