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Duncan recently completed ACST1001 and is hoping to apply what he has learned to start investing. Duncan is interested in a $1,000 18-year bond paying
Duncan recently completed ACST1001 and is hoping to apply what he has learned to start investing. Duncan is interested in a $1,000 18-year bond paying half-yearly coupons with a coupon rate of 7.5%. The yield to maturity for such bonds is 8% p.a. compounding half-yearly.
b) Calculate the fair price Duncan should pay for one such bond, given the market conditions described above. (2 marks)
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