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QUESTION
Recall that the Par Rate is the coupon rate such that a bond sells at par. A company wants to issue a 2 year bond with annual payment that sells at...
Recall that the Par Rate is the coupon rate such that a bond sells at par. A company wants to issue a 2 year bond with annual payment that sells at par. Assume R(0,1) = 4% and R(0,2)= 6%.The coupon rate should be set at
