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Question 1 a) What is the duration of a three-year bond with a coupon of 5% if the market interest rate is 3%? b) Is

Question 1

a) What is the duration of a three-year bond with a coupon of 5% if the market interest rate is 3%?

b) Is the bond selling at a discount or a premium-why? (a one-sentence explanation please).

c) What zero-coupon bond (price and duration) can immunize cash flows that are identical to the cash flows of this bond?

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