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A company is considering issuing new 20-year, zero coupon bonds with a par value of $1,000. If the discount rate is 8%, compute the likely
A company is considering issuing new 20-year, zero coupon bonds with a par value of $1,000. If the discount rate is 8%, compute the likely selling price of one of these bonds. Why do you think investors would be willing to purchase such an instrument, knowing there will be no cash flows until maturity? What risk is the investor facing? 5
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