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3. CDE Company issued several hundred million dollars' worth of bonds twenty-one years ago. These bonds had 25-year original maturities, therefore they will mature in
3. CDE Company issued several hundred million dollars' worth of bonds twenty-one years ago. These bonds had 25-year original maturities, therefore they will mature in four years. Each individual bond has a $1,000 par value and a 7% annual coupon interest rate, with interest paid semiannually. Today, rational buyers of bonds with similar risk, 4-year remaining lives, and semiannual interest payments require a 10% effective annual rate (EAR) of return (also called the bond's yield to maturity). What should a rational investor be willing to pay for one of these CDE bonds? If CDE were to issue 4-year bonds today, what coupon interest rate would we expect them to pay
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