Multiple Choice
Consider a bond that pays $1000 in one year.Suppose that the market interest rate for savings is 8%,but the interest rate for borrowing is 10%.The price range that this bond must trade in a normal market if no arbitrage opportunities exist is closest to:
A) $909 to $917.
B) $909 to $926.
C) $917 to $926.
D) $909 to $1000.
Correct Answer:
Verified
Correct Answer:
Verified
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