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Suppose we have a two-year semiannual bond (par=1,000) that has a coupon rate of 6%. This bond is a little special such that it pays
Suppose we have a two-year semiannual bond (par=1,000) that has a coupon rate of 6%. This bond is a little special such that it pays half of the par value half way through. That is, you receive the second coupon payment together with $500 at the end of the first year. Calculate the price of the bond if YTM = 10%. (After paying half of the face value ($500) out, be careful with the coupon payment in the second year. I recommend you use a timeline and put the correct amount for the cash flows)
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