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2. Three bonds are issued with an annual coupon rate of 7%; however, the first bond is priced at 110 per 100 par value bond using a market discount rate of 5%, the second bond is priced at par value using a market discount rate of 6%, and the third bond is priced at 97 per 100 par value bond with an appropriate market discount rate of 8%. What among the three bonds is most likely mispriced?
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Answer rating: 100% (QA)

To determine which bond is most likely mispriced we can calculate the yield to maturity YTM for each ... View the full answer