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Consider 3 bonds with the same face value ($1000) and maturity (3 years). All three bonds offer an annual coupon, but they have different coupon
Consider 3 bonds with the same face value ($1000) and maturity (3 years). All three bonds offer an annual coupon, but they have different coupon rates; ca = 6%, cb = 8% and cc = 10%. Interest rates are 8% for every maturity.
1. Price the three bonds.
2. Estimate the yield to maturity of the three bonds (Use excel, a financial calculator or..)
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