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Problem 2 This is a multi-step (three parts) problem. Part A: At t=0, you purchase a six-year, 7 percent coupon bond (paid annually) that is
Problem 2 This is a multi-step (three parts) problem. Part A: At t=0, you purchase a six-year, 7 percent coupon bond (paid annually) that is priced to yield 6 percent (0.06) annually compounded (YTM = 6% or 0.06 annually compounded). The face value of the bond is $1,000. The bond issuer is the U.S. government (no liquidity risk). You are also given that your holding period (investment horizon) equals to the maturity of the bond (t=T=6 years). What is the bond price in U.S. dollars at time t=0
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