How much would you have at the end of year 3

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Assume the yield curve is flat at 4%. There are a 3-year zero coupon bond and a 3-year coupon bond that pays a 5% coupon annually. Suppose the yield curve does not change in the future. You invest 100 in each of the two bonds. You re-invest all coupons in zero coupon bonds that mature in year 3. How much would you have at the end of year 3?

Reference no: EM132348781

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