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Example 4: zero-coupon bond: John wants to buy a 20-year, AAA-rated, $1000 par value, zero-coupon bond being sold by Diversified Industries Inc. The yield to

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Example 4: zero-coupon bond: John wants to buy a 20-year, AAA-rated, \$1000 par value, zero-coupon bond being sold by Diversified Industries Inc. The yield to maturity on similar bonds is estimated to be 9%. a) How much would he have to pay for it? b) How much will he be taxed on the investment after 1 year, if his marginal tax rate is 30%

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