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Comider a bond with the following features . Exactly 2 wars to maturity . 5 coupon, said $100 per We observe the following interest rates

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Comider a bond with the following features . Exactly 2 wars to maturity . 5 coupon, said $100 per We observe the following interest rates in the economy The Period Rate Oyly 3.00% over 400X 600W "Ovay 5.01% "ayar Although the lyly rate above is the market expectation for what the 1 year rate will be 1 year from now you expect that it is equally likely that the actual rate is either 25% higher or 25% lower than the expectation Specifically, you believe that the one year rate will either 6.26.3.76% (4 pts.) Now suppose that the bond is callable in exactly one year (e.g., at t - 1) for 100. What is the price of the bond today? $101.95 O $98.81 O $101.92 O $101.37

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