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Homer Simpson is considering buying the following three bonds (all AAA rated): Springfield Nuclear Power Plant: 5 - year, 7% semi - annual coupon, $
Homer Simpson is considering buying the following three bonds (all AAA rated): Springfield Nuclear Power Plant: 5 - year, 7% semi - annual coupon, $ 1,000 par Duff Beer: 5 - year, 5% semi - annual coupon, $1,000 par Quickie Mart: 5 - year, 11 % semi - annual coupon, $ 1,000 par Each of these bonds has the same yield to maturity of 4.75% and Homer's broker charges a $108.65 commission to purchase the portfolio of all three bonds at once (one each). What is the most Homer should be willing to pay for this portfolio (before commission)? What is Homer's expected rate of return on this portfolio
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