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A 9.75% coupon rate bond, with 5 years until maturity is selling at $950. An investor with a 10 required rate of return ask your
A 9.75% coupon rate bond, with 5 years until maturity is selling at $950. An investor with a 10 required rate of return ask your advice. If Interest is paid annually, What is your advice regarding the purchase of the bond?
a)don't purchase the bond because the bond is overvalued by $40.52
b)not enough data to answer
c)don't purchase because the bond is overvalued
d)purchase the bond because the bond is undervalued by $3.43
e)purchase the bond because the bond is undervalued by $40.52
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