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An investor has a 1-year, semiannual, 10% coupon bond which is priced at $1,025. If the 6-month spot rate on a bond-equivalent basis is 8%,
An investor has a 1-year, semiannual, 10% coupon bond which is priced at $1,025. If the 6-month spot rate on a bond-equivalent basis is 8%, the 1-year theoretical spot rate (as a BEY) is:
a. 6.4%
b. 7.3%
c. 8.0%
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