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Question 1 2 You would like to buy a 1 4 - year, $ 1 , 0 0 0 par value bond. The annual coupon

Question

12

You would like to buy a

14 -

year, $

1, 000

par value bond. The annual coupon rate on this bond

11

percent. If the current yield to maturity of the bond is a

9

percent, what is the value of

this bond? After one year from the purchase, what is the value of the bond?

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