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What should the price of bond be today

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Reference no: EM132686975

Suppose you would like to buy today a five-year, $1000 bond with a 5% coupon rate and semi-annual coupons. The bond was issued exactly one year earlier today. The current market interest rate on similar bonds is 6%.

A. What should the price of this bond be today?

B. Suppose that you hold the bond until its maturity, what should be your total rate of return on this bond?

Reference no: EM132686975

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