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4 . You want to secure a payment of $ 1 0 million in 8 years. You find a 1 2 - year, 1 0

4. You want to secure a payment of $10 million in 8 years. You find a 12-year, 10.25% coupon semi-annual bond with a face value of $1000 with a YTM =6.50%. It has a duration of 8.0. How many of these bonds will you purchase today to generate the appropriate payout in 8 years? Now, show that if, after you purchase the bond rates suddenly change so that the new YTM on the bond is 7.5%, you will still generate the appropriate $10 million payout in year 8.

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