A 30-year maturity bond has a 7% coupon rate, paid annually. It sells today for $867.42. A

Question:

A 30-year bond has a 7% rate, paid annually. It sells today for $867.42. A 20-year bond has 6.5% rate, also paid annually. It sells today for $879.50. A bond market analyst forecasts that in 5 years, 25-year bonds will sell at yields to of 8% and 15-year bonds will sell at yields of 7.5%. Because the yield curve is upward sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 6%. Which bond offers the higher expected rate of return over the 5-year period?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...