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You decide to purchase a zero coupon bond as a strategy to fund a year of college education. You estimate you will need $40,000 for a year of education. What is the price today of a 15 year zero coupon bond with face value $40,000 in a market with current market yield of 5.27% compounded annually?

Suppose you need to sell the bond after holding it for 10 years. If the market price on the day you sell is $31,070.83, what is the market yield to maturity at the time of sale?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91622275

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