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Treat the bond equivalently to a coupon-paying bond

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Reference no: EM131210597

What is the price of a three year zero coupon bond if the annual interest rate in year 1 will be 3% and the annual interest rate in years 2 and 3 is 4%? The face value of the bond is $1000 and you may assume that investors treat the bond equivalently to a coupon-paying bond that pays coupons semi-annually.

Reference no: EM131210597

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