How much can the government expect to receive per bond

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Suppose the equity market premium is 0.04 and a security with a beta of +1.5 has an equilibrium expected rate of return of 0.10. If the government wishes to issue risk-free zero-coupon bonds with a term to maturity of one period and a face value per bond of $1000, how much can the government expect to receive per bond?

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Reference no: EM131185297

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