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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
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Fundamentals Of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
16th Edition
0357517571, 978-0357517574
