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The current term-structure of spot interest rates for safe zero-coupon bonds is as follows: 
Maturity, in years 
Interest rate(r) 
1 8% 
2 10% 
3 11% 
4 12% 
5 13% 
There is a safe bond B which has 4 years before maturity and pays a coupon of 12% at regular annual intervals and a face value of $100 at maturity. 

(a) What will be the current price of bond B?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9104873

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