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Suppose That a Bond with a $1,000 Face Value Matures

Question 23

Multiple Choice

Suppose that a bond with a $1,000 face value matures in one year and pays a 10% coupon rate. It is selling for $1,025. What interest rate would make a person indifferent between the selling price of $1,025 and the bond payment (face value and coupon) one year from now?


A) 9.8%
B) 7.3%
C) 11.1%
D) 10.2%

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