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What is the payoff from buying a call

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Reference no: EM132506280

You have a two-year coupon bond with principal of $100. The coupon rate is 20%. The spot rates for years 1 and 2 are 10% and 20%, respectively. What is the payoff from buying a call over this bond if the strike is $100. Is it recomendable to buy this call today at $2?

Reference no: EM132506280

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