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Consider the following information form September 15th, 2012 for a coupon bond with face valueof $1000 and maturity on September 15th, 2014:

Coupon rate: 5%

Price: %955.11

YTM: 7.5%

a) What was the bond current yield?

b) Why is the bond's yield to maturity greater than its coupon rate?

Financial Management, Finance

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