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A firm specializes in buying deep discount bonds (i.e. bonds trading at well below par). The firm is eyeing a bond that pays 8% annual
A firm specializes in buying deep discount bonds (i.e. bonds trading at well below par). The firm is eyeing a bond that pays 8% annual interest and has 17 years remaining to maturity. The bond is currently selling at 35% below par.
Required: By what percent will the price of the bonds increase between now and maturity based on semi-annual analysis?
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