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You are holding a par bond with a 3 year maturity, which pays coupon rate of 8% and is selling at par. Assume that immediately

You are holding a par bond with a 3 year maturity, which pays coupon rate of 8% and is selling at par. Assume that immediately after the purchase, market rates for this bond drop to 4%.

a) What is the bond new price?

b) What will be the realized compound yield if the bond is held to maturity? (assume annual coupons)

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