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Question 1 (25 Marks) 1. Define and explain the one-period rate of return? When does it equal the yield to maturity? (13 Marks) 2. Consider

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Question 1 (25 Marks) 1. Define and explain the one-period rate of return? When does it equal the yield to maturity? (13 Marks) 2. Consider a 5%-coupon bond with face value 200 maturing in 3 years that sells at 216 today. Next year, the price increases to 220. The year after, the price decrease to 216. Calculate all one-period returns. (12 Marks)

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