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Problem 9 : You are interested in buying a bond that has a coupon rate of 9 % , and matures in 2 5 years.

Problem

9

: You are interested in buying a bond that has a coupon

rate of

9 %,

and matures in

25

years. The market rate for bonds

with similar risk is

11.5 % .

What is the most you should pay for

this bond? show the formula used.

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