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You are considering the purchase of a Treasury bond in the secondary market. Bonds with exactly 10 years to maturity, paying a half-yearly coupon of
You are considering the purchase of a Treasury bond in the secondary market. Bonds with exactly 10 years to maturity, paying a half-yearly coupon of 7.00 per cent per annum, are currently yielding 7.50 per cent per annum. The bond has a face value of $1000. What price should you pay for the bond today? Show your working.
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