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A one-year zero-coupon bond has an interest rate of 4% (spot rate r 1 ); a two-year zero-coupon bond has an interest rate of 8%

A one-year zero-coupon bond has an interest rate of 4% (spot rate r₁); a two-year zero-coupon bond has an interest rate of 8% (spot rate r₂).

a) What should a 6% coupon, two-year bond cost?Answer to the nearest penny.

b) What is the yield to maturity on the bond? Answer should be xx.xx%

Please show your work.

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