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You purchased a bond with a par value of $1,000 and a coupon rate of 8 percent at a price of $1,100 at the beginning
You purchased a bond with a par value of $1,000 and a coupon rate of 8 percent at a price of $1,100 at the beginning of the year. The price of the bond was $1,000 at the end of the year. Which of the following development(s) could explain this change?
1. The default risk of the bond increased.
2. The YTM of bonds of similar credit risk increased.
3. The YTM of bonds of similar credit risk decreased.
4. The inflation rates increased in line with market expectations.
Group of answer choices 1 and 3
1, 3 and 4
1 only
1 and 2
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