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An investor is considering the purchase ofa(n) 7.250 % , 18-year corporate bondthat's being priced to yield 9.250 % . She thinks that in ayear,

An investor is considering the purchase ofa(n) 7.250 %, 18-year corporate bondthat's being priced to yield 9.250 %. She thinks that in ayear, this bond will be priced in the market to yield 8.250 %. Using annualcompounding,

find the price of the bond today

in 1 year.

Next, find the holding period return on thisinvestment, assuming that theinvestor's expectations are borne out.

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