What is the interest rate

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Reference no: EM131832926

a. If a zero-coupon bond with a face value of $1,000 payable in 1 year sells for $925, what is the interest rate?

b. If another bond with the same face value and maturity sells for $900, what is the interest rate on this bond?

c. Which bond, the one discussed in question a or question b, would you rather invest in? Are you sure? Think again!

Reference no: EM131832926

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