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Question No 10 You invest $54,000 in a $1.000 par value corporate bond, which is currently selling for $910 each. The bond pays 5.5% interest

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Question No 10 You invest $54,000 in a $1.000 par value corporate bond, which is currently selling for $910 each. The bond pays 5.5% interest each year on its par value. The price of the bond at year's end will depend on the level of interest rates that will prevail at that time. You have constructed the following scenario analysis: Probability 0.20 Interest Rates High Unchanged Low Year-end bond Price $850 915 0.50 0.30 985 Your alternative investment is a T-bill that yields a sure rate of return of 5% Calculate the expected rate of return and the risk premium on your investment. What is the expected end-of-year dollar value of your investment

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