What is the difference between the yield to maturity

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1. Arbitrage insures that equal cash flows (of equal risk) sell at _______________ and unequal cash flows (of equal risk) sell at ___________.

2. What is the difference between the yield to maturity and the yield to call? 

3. When would you expect a bond to be called when interest rates have increased after issuance or decreased after issuance?

4. To value a bond you need to bring the future interest payment and maturity value back to present. When you bring these future cash flows

back to present do you use the coupon rate or the market yield as the discounting rate? Pick one

5. Which bond should change more with a 1% change in interest rates a 20 year 8% bond or a five year 8% bond?

Reference no: EM131132519

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