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An investor is considering buying an 8%, 10-year corporate bond that yield 10% per year. She estimates that in one year, the bond will be

An investor is considering buying an 8%, 10-year corporate bond that yield 10% per year. She estimates that in one year, the bond will be priced to reflect the market yield of 9%. Assuming the par value of the bond is RM1,000, using annual compounding, compute the price of the bond today (at T=0) and in one year (at T=1). Using the computed results, estimate the holding period return (in %) that the investor can will get from this one-year investment horizon. (15 marks)

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