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A 20-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is: (LO 10-2)
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a. $950 b. $1,000 c. $1,050
Redo the previous problem using the same data, but now assume that the bond makes its coupon payments annually. Why are the yields you compute lower in this case? (LO 10-2)
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