Last year you bought a bond for $1,050. It was a 20 year 7% coupon rate bond with yield-to-maturity of 6.54%. It’s face value is $1,000. This year you want to sell the bond. Bonds with similar maturity and risk profile now trade at a 7.5% yield-to-maturity. What is your one-year return from investing in this bond?
Last year you bought a bond for $1,050. It was a 20year 7% coupon rate bond with yield-to-maturity of
6.54%. It’s face value is $1,000. This year you want to
sell the bond. Bonds with similar maturity and risk
profile now trade at a 7.5% yield-to-maturity. What is
your one-year return from investing in this bond?
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