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Consider a bond with a face value F a maturity of T years and a coupon rate p%, coupons paid semi annually, with price P.

a) Define the yield to maturity of the bond

b) What does it mean that the bond sells "at parity" (or "at par")

c) Explain why the bond sells at parity when the coupon rate equals the yield to maturity

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Jarrod Robel
Jarrod RobelLv2
30 Sep 2019

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