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Below is a list of prices for zero-coupon bonds of various maturities (1) An 8.5% coupon $1,000 par bond pays an annual coupon and will
Below is a list of prices for zero-coupon bonds of various maturities (1) An 8.5% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (2) If at the end of the first year the term structure of interest rates flattens out at 7%, what will be the 1-year holding-period return on the coupon bond
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