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Mr. Simpson buys a $1000 bond paying bond interest at j2= 6.5%and redeemable at par in 20 years. He desires a yield rate of j4=7%. (a) How much did he pay for the bond? (b) After exactly 5 yearshe sells the bond. Interest rates have dropped and the bond is soldto a buyer to yield at j1 = 5%. Find sale price. (other answer hereis not correct)
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