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2. Consider a coupon bond with maturity T = 5 years and annual coupon rate q = .04. Dealers are selling the bond at
2. Consider a coupon bond with maturity T = 5 years and annual coupon rate q = .04. Dealers are selling the bond at an ask price Pa per $100 face and purchasing the bond at a bid price P6 per $100 face. The yield to maturity computed using the ask price is y = .0445 and the yield to maturity computed using the bid price is y = .04744. Determine the bid-ask spread Pa - Pb (per $100 face).
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