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At the beginning of the year, you bought a $1.000 par value corporate bond with an annual coupon rate of 8 percent and a maturity date of 11 years. When you bought the bond, it had an expected yield to maturity of 14 percent. Today the bond sells for $760.
a. What did you pay for the bond?
b. If you sold the bond at the end of the year, what would be your one-period return on the investment? Assume that you did not receive any interest payment during the holding period.
a. The price you paid for the bond is $
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APT: Say a given market index (M) is a well-diversified portfolio and has an expected return of 15%.
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