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You are required to price a treasury bond with a coupon rate 7 % paid annually. The par value of the bond is $ 1
You are required to price a treasury bond with a coupon rate paid annually. The par
value of the bond is $ The maturity of the bond is years.
i State the principles of bond valuation and assumptions.
ii What is the price of the bond when YTM is annually?
iii. What is the price of the bond when YTM is annually?
iv Use a diagram to illustrate the relation between bond price and interest rate.
v Explain at which situation a bond is priced at a discount, premium or at par value.
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