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Problem You receive a call from your broker to offer you a new bond whose par value is $ 1,000, has a maturity of 14
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You receive a call from your broker to offer you a new bond whose par value is $ 1,000, has a maturity of 14 years and an annual interest rate of 9%. This bond is being sold to you for $ 1,100. The required market return for a comparable bond at risk is 10%.
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