3c) The risk-free rate is 3%. The credit-spread of a bond (the difference between the...
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3c) The risk-free rate is 3%. The credit-spread of a bond (the difference between the yield-to-maturity and the risk-free rate) is 2%. The face value of the bond is $1,000, and the clean price is $980. The bond has annual coupon payments, and a coupon payment has just been made, with a further 5 coupons remaining. What is the coupon rate of the bond? (9 marks)
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