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You own a S1,000 face value, zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in one year and
You own a S1,000 face value, zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in one year and believe that the required yield next year will have the following probability distribution: Probability 0.1 Required Yield 5.50% 5.75% 0.1 0.6 6.00% 625/o 0.1 0.1 6.50% a. What is your expected price when you sell the bond? b. What is the standard deviation
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