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Question 11 (2 marks) An investor has the following two options: a) To buy a two-year $1,000 zero-coupon bond at a market price of $860,
Question 11 (2 marks) An investor has the following two options: a) To buy a two-year $1,000 zero-coupon bond at a market price of $860, or. b) To buy a two-year $1,000 bond with an annual interest of 3% at a market price of $900. Assuming annual coupon payments, which option do you think the investor should choose? Explain why. You must show your calculation, otherwise, your mark will be deducted
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