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You bought a 10-year bond for $1,000 on Jan 1, 2010 with an interest rate of 10%. At the end of year 3, the interest
You bought a 10-year bond for $1,000 on Jan 1, 2010 with an interest rate of 10%. At the end of year 3, the interest rate in the market for a comparable bond went up to 20%. What should be the market price of the bond on Jan 1, 2013? You can assume that that the bond pays interest once at the end of the year also?
- $500
- $842.6
- $639.5
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