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Assume the following information: i) A two-year $1,000 face value bond with 10% annual coupons. ii) The one-year spot rate (r) is 9%. iii) The
Assume the following information: i) A two-year $1,000 face value bond with 10% annual coupons. ii) The one-year spot rate (r) is 9%. iii) The forward rate (f[1,2]) is 10.5%. Assuming no risk of default, in which of the following ranges does the price of the bond fall? Possible Answers A $1,000 but $1,004 but $1,008
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