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Q2. Suppose a U. S. government bond promises to pay $2,249.73 three years from now. If the going interest rate on a 3 years government
Q2. Suppose a U. S. government bond promises to pay $2,249.73 three years from now. If the going interest rate on a 3 years government bond is 4%, how much is the bond worth today? How would your answer change if the bond matured in 5 years rather than 3 years? What if the interest rate on the 5 year bond were 6% rather than 4%?
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