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Question: 25 today t0 an investor purchased a 20 year bond...

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25. Today (T=0), an investor purchased a 20 year bond with a 5.00% coupon and a face value of $100,000 for $106,550. In six months (T=0.5) interest rates have decreased by 0.50% and the investor decides to sell the bond immediately after receiving the first coupon payment. What is the investor’s total gain (loss) on the bond? HINT: Total Gain (Loss) = Price Change in Bond + Coupon

  1. ($6,548)

  2. ($6,048)

  3. $7,130

  4. $7,602

  5. $7,630

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