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Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 5%

Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 5% per half-year. The bond has three years until maturity.

Required:

a. Find the bonds price today and six months from now after the next coupon is paid.

b. What is the total (6-month) rate of return on the bond?

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