Question: A 2-year bond with par value $1,000 making annual coupon payments of $100 is priced at $1,000. What is the yield to maturity of the

A 2-year bond with par value $1,000 making annual coupon payments of $100 is priced at $1,000. What is the yield to maturity of the bond? What will be the realized compound yield to maturity if the 1-year interest rate next year turns out to be?

(a) 8%,

(b) 10%,

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