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Suppose a bond has a life of three periods. It offers $50 coupon payments in periods 1,2, and 3. It has a face value of
- Suppose a bond has a life of three periods. It offers $50 coupon payments in periods 1,2, and 3. It has a face value of $1000. If the relevant interest rate is 8% for period 1, 5% in period 2, and 10% in period 3, what is the present value of this bond?
- Using your own words, briefly explain why:
a. An investor may prefer a forward contract to a futures contract.
b. An investor may prefer a futures contract to a forward contract.
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