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Problem:

Suppose you are considering investing in either of two AAA corporate bonds. One will provide you with an annual 8% coupon payment, while the other only pay's a 6% coupon. Assume current yields for AAA bonds are 7%.

Required:

Question 1: Explain why your yield to maturity will be 7%, regardless of which bond you purchase? Explain in detail and also show all work.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91147303

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