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Consider a bond that promises to pay $100 in one year. a. What is the interest rate on the bond if its price today is

Consider a bond that promises to pay $100 in one year.

a. What is the interest rate on the bond if its price today is

$75? $85? $95?

b. What is the relation between the price of the bond and

the interest rate?

c. If the interest rate is 8%, what is the price of the bond

today?

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