A coupon bond of 7.9 percent with 15 years left to maturity is priced to offer a 6.45 percent yield to maturity. You believethat in one year, the yield to maturity will be 7.2 percent. (Assume interest payments are semiannual.)What would be the total return of the bond in dollars?What would be the total return of the bond in percentage?Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.Total return in dollarsTotal return in percentageCheck my work%

Total return of a bond:The total return of a bond refers to the overall gain or loss an investor…

A coupon bond of 7.9 percent with 15 years left to maturity is priced to offer a 6.45 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.2 percent. (Assume interest payments are semiannual.)

A coupon bond of 7.9 percent with 15 years left to maturity is priced to offer a 6.45 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.2 percent. (Assume interest payments are semiannual.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

A coupon bond of 7.9 percent with 15 years left to maturity is priced to offer a 6.45 percent yield to maturity. You believe
that in one year, the yield to maturity will be 7.2 percent. (Assume interest payments are semiannual.)
What would be the total return of the bond in dollars?
What would be the total return of the bond in percentage?
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
Total return in dollars
Total return in percentage
Check my work
%

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