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Imagine that, at time t, the market interest rate is 5%. Consider three investors A,B, and C who purchase bonds at time t, with the
Imagine that, at time t, the market interest rate is 5%. Consider three investors A,B, and C who purchase bonds at time t, with the intention of selling them at time t+1. Assume that investor A purchases bonds that mature in ten years, investor B purchases bonds that mature in five years, and investor C purchases bonds that mature in 30 years. Furthermore, imagine that it turns out that at time t+1 the market interest rate is equal to 7%. Which of the three investors earns the highest rate of return between periods t and t+1 ? Investor C Investor B Investor A All investors receive the same rate of return
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