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Peter buys a bond with a face value of $100, a time to maturity of four years, a coupon of 4% pa with semi-annual payments
Peter buys a bond with a face value of $100, a time to maturity of four years, a coupon of 4% pa with semi-annual payments and a yield of 3% pa. Fifteen months later, the Reserve Bank of Australia unexpectedly increases the cash rate. The yield on Peter's bond increases to 3.5% pa. Peter sells the bond. Calculate the buying and selling price of the bond.
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