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Imagine that the market yield to maturity for three-year bonds in a particular risk class is 11 per cent. You buy a bond in that
Imagine that the market yield to maturity for three-year bonds in a particular risk class is 11 per cent. You buy a bond in that risk class which offers an annual coupon of 9 per cent for the next three years, with the first payment in one year. The bond will be redeemed at par (100) in three years. How much would you pay for the bond?
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