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Problem 3: Return on zero-coupon bond Assume you buy a 20-year, $1,000 par value zero-coupon bond that provides a 12% yield to maturity. Almost immediately

Problem 3: Return on zero-coupon bond

Assume you buy a 20-year, $1,000 par value zero-coupon bond that provides a 12% yield to maturity. Almost immediately after you buy the bond, yields decrease to 9%. What will be the percentage gain on the investment?

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