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Question 2 A 1000 bond with annual coupon is redeemable at par of 10 years. The yield rates is 5% and the coupon rate is

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Question 2 A 1000 bond with annual coupon is redeemable at par of 10 years. The yield rates is 5% and the coupon rate is 6%. The coupons increase geometrically at the rate of 3% per annum. (a) Calculate the price of the bond. (b) Determine the ratio of the book values of the bond at the end of three years to the end of five years

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