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. Suppose an investor with a 6-year investment horizon purchased a 20-year 8% semi-annually paid coupon bond when the interest rate is 10%. The investor expects that he can reinvest the coupon at an annual interest rate of 6%. At the beginning of year 7, he expects the then yield to maturity to be 7%. What is the total return for this bond?
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