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A two-year bond pays a coupon rate of 10 percent and has a face value of $1,000. (In other words, the bond pays interest of
A two-year bond pays a coupon rate of 10 percent and has a face value of $1,000. (In other words, the bond pays interest of $100 per year, plus its principal of $1,000 in year 2.) If the bond sells for $960, what is its approximate yield to maturing? Hint: This requires some trial-and-error calculations.
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