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The YTM of 1,000 bond with a 10% coupon rate, semiannual coupons, and two years to maturity is 6.5 APR, compounded semiannually. b.Suppose the market
The YTM of 1,000 bond with a 10% coupon rate, semiannual coupons, and two years to maturity is 6.5 APR, compounded semiannually. b.Suppose the market price of this bond curretly is $980. Is there an arbitrage opportunity ? Answer : Yes / No c. Is this bond undervalued or overvalued by the market ? Answer : I don't know / Undervalued / Overvalued d. Should you long or short this bond ? Answer : Long / Short / Do nothing e. How much will be your arbitrage profit ? Answer : 31.79 / 83.72 / 84.66 / 7.31 / 0.00
b.Suppose the market price of this bond curretly is $980. Is there an arbitrage opportunity ?
Answer : Yes / No
c. Is this bond undervalued or overvalued by the market ?
Answer : I don't know / Undervalued / Overvalued
d. Should you long or short this bond ?
Answer : Long / Short / Do nothing
e. How much will be your arbitrage profit ?
Answer : 31.79 / 83.72 / 84.66 / 7.31 / 0.00
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Financial Accounting
Authors: David Spiceland, Wayne M. Thomas, Don Herrmann
5th edition
1259914895, 978-1259914898
