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You just bought a fifteen-year maturity Xerox corporate bond rated AA with a 0% coupon. You expect to sell the bond in eight years. Find
You just bought a fifteen-year maturity Xerox corporate bond rated AA with a 0% coupon. You expect to sell the bond in eight years. Find the expected interest rate at the time of sale (watch out for rounding error).
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12.49% | ||
At the time you bought the Xerox bond above, there was also a similar Xerox 15 year AA bond paying a 6% coupon. In terms of duration, the coupon bond is riskier. |
True or False?
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