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A risk-free 3-year annual coupon bond has a 5% coupon rate, a face value of $1,000, and trades for $950. The 1-year spot rate is
- A risk-free 3-year annual coupon bond has a 5% coupon rate, a face value of $1,000, and trades for $950. The 1-year spot rate is 5%. The 2-year spot rate is 5.25%. The 3-year spot rate is 5.5%. What is the yield to maturity? What is your trading strategy?
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