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What is the price of the bond today? What is your expected return on this transaction? You buy a $1,000-par zero-coupon bond that has five

What is the price of the bond today?

What is your expected return on this transaction?

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You buy a $1,000-par zero-coupon bond that has five years of remaining maturity. Rates are 6%. You plan on selling the bond in one year and believe that the interest rate next year will have the following probability distribution: Probability Interest Rate Next Year (%) 0.1 6.60 0.2 0.4 0.2 6.75 7.00 7.20 7.45 0.1 What is the price of the bond today

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