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An investor purchases the following debt instruments with a $1,000 face value, for $826.44 and $1,000 respectively. i) a pure discount two-year bond, and ii)
An investor purchases the following debt instruments with a $1,000 face value, for $826.44 and $1,000 respectively. i) a pure discount two-year bond, and ii) a two-year 10% annual coupon bond Calculate the return after two years if immediately after purchase interest rates a) fall by 1% p.a. b) remain constant, and c) increase by 1`% p.a. on all maturities. (Assume that the yield curve is flat). pls give me detail why that number should put here and how is getting and how is getting. thanks!
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