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Questions 1. The current interest rate is 7.4%. Next year, the interest rate will be 3.66% (with 56 % probability) or 8.56%. a perpetual bond

Questions 1.

The current interest rate is 7.4%. Next year, the interest rate will be 3.66% (with 56 % probability) or 8.56%. a perpetual bond is callable at $1.039, and it will be called if the interest rate drops to 3.66%.. What is the coupon amount (in $) if the bond is priced to sell at par?

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