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a Assume you have a one-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk, $1,000
a Assume you have a one-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk, $1,000 par value and mature in 10 years. The first bond is a zero-coupon bond that pays $1,000 at maturity. The second one has an 8% coupon rate and pays the $80 coupon once per year. The third bond has a 10% coupon rate and pays the $100 coupon once per year. a) If all three bonds are now priced to yield 8% to maturity, what are their prices? b) If you expect their yields to maturity to be 9% at the beginning of next year, what will their prices be then? c) What is the rate of return for each bond
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