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Question You have just purchased a 1,000 bond with 7% annual coupon and maturity in 10 years. a. If the yieldtomaturity is 6%, how much

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You have just purchased a 1,000 bond with 7% annual coupon and maturity in 10 years.

a. If the yieldtomaturity is 6%, how much did you pay for the bond?

b. If, 1 yearlater and on the day after you receive the first coupon,the bond's yieldtomaturity

goes up to 8%, and you need cash and have to liquidate your investment. What will be your

selling price?

c. What will be your 1year holding period rate of return?

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