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Consider a five-year, default-free bond with annual coupons of 3 % and a face value of $ 1 comma 000 and assume zero-coupon yields on
Consider a five-year, default-free bond with annual coupons of 3 % and a face value of $ 1 comma 000 and assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity 1 year 2 years 3 years 4 years 5 years Zero-Coupon Yields 2.00% 2.30% 2.50% 2.70% 2.80% a. What is the yield to maturity on this bond? b. If the yield to maturity on this bond increased to 3.20 %, what would the new price be?
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