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3 . Suppose you are considering purchasing a coupon bond with a coupon rate of 5 percent and a face value of $ 1 0
Suppose you are considering purchasing a coupon bond with a coupon rate of percent and a face value of $ that matures in years.
a How much would you be willing to pay for this bond if the market interest rate is percent?B Suppose you have just purchased the bond, and the market interest rate suddenly rises to percent. What is the bond worth now?
c Suppose that one year has elapsed, you have received the first coupon payment, and the market interest rate is still percent. How much would another investor be willing to pay for your bond? If you sell your bond at this price, what would be your rate of return?
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