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Question 5 Answer the following questions:- (a) A 1000 par value 20-year bond with annual coupons redeemable at maturity at 1200 is purchased for A

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Question 5 Answer the following questions:- (a) A 1000 par value 20-year bond with annual coupons redeemable at maturity at 1200 is purchased for A to yield an annual effective rate of 7%. The first coupon is 50. Each subsequent coupon is added by 10 from the previous year coupons (i.e. 50,60,70,...,240). Determine A. [4 marks] (b) Show that .+ d. [3 marks]

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