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You buy the 6 percent coupon bond today and the price of the bond is $1.012. Par value of the bond is $1.000. The maturity

You buy the 6 percent coupon bond today and the price of the bond is $1.012. Par value of the bond is $1.000. The maturity of the bond is 3 years.

a) According to the information given above, what will be the bonds yield to maturity?

b) If the bond has currently 3 years left to maturity and suppose that by the end of the year, interest rates have changed and the bonds yield to maturity is now only 4%. What will be the bonds rate of return?

,NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS.

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