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Compute the value of the following bonds assuming a 3% discount rate (required rate of return): A zero-coupon bond that pays $1,000 in five years
- Compute the value of the following bonds assuming a 3% discount rate (required rate of return):
- A zero-coupon bond that pays $1,000 in five years
- A bond that pays $1,000 in five years, with five annual coupon payments of $20 each
- What is the coupon rate if coupon payments are $20 per year? At what discount rate would the value of the bond be "at par" (e.g., be worth $1,000?). Explain your reasoning.
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