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Given the following, does the law of one price hold? If not, what action should an investor take? Cash Flows in Period Bond 1 2
Given the following, does the law of one price hold? If not, what action should an
investor take?
Cash Flows in Period
Bond 1 2 Price
A 100 1,100 970
B 80 1,080 936
C 90 1,090 980
2. Assume a bond with cash flows of $100 each year and a principal payment of $1,000
in five years and a current price of $960. What is
A. Its current yield?
B. Its yield to maturity?
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