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You are given the following information on two traded bonds making annual payments. File Preview Face Value Coupon Maturity Price Bond A Zero Coupon

 

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You are given the following information on two traded bonds making annual payments. File Preview Face Value Coupon Maturity Price Bond A Zero Coupon Bond B Coupon Bond $100 $100 0% 1 year $90 10% 2 year $108 1. What should be the price of a 2 year zero coupon bond with a face value of $100? (5 points) 2. Show how you can make an arbitrage profit if the price of a 2 year zero coupon bond is $95. (10 points) 3. File Preview points) you can make an arbitrage profit if the price of a 2 year zero coupon bond is $80. (10

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