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What is the price of each bond today

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Currently, the term structure is as follows: 1-year zero-coupon bonds yield 7%; 2-year bonds yield 8%; 3-year bonds and longer-maturity bonds all yield 9%. You are choosing between 1-? 2-, and 3-year maturity bonds all paying annual coupons of 8%.

a. What is the price of each bond today?

b. What will be the price of each bond in one year if the yield curve is ?at at 9% at that time?

c. What will be, the rate of return on each bond?

Reference no: EM133125651

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