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3) A 10 year zero coupon bond maturing at $1000 is callable at the 7 year point for $900. a) What price should an investor

3) A 10 year zero coupon bond maturing at $1000 is callable at the 7 year point for $900.

a) What price should an investor pay if they want a (annual effective) yield of at least 5%?

b) What will their yield be if the bond is called early?

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