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Exercise: Semi-Annual Pay Bonds 1. Assume: F = $1000, C/2 = $40, t = 4 years. 2. If P = $1000, we know YTM 8%.

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Exercise: Semi-Annual Pay Bonds 1. Assume: F = $1000, C/2 = $40, t = 4 years. 2. If P = $1000, we know YTM 8%. 3. Calculate the annual return assuming you reinvest the coupons at the YTM/2 or at 0.08/2 = 4%. 4. What is the relationship between YTM and rann in this case

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