Question: A bond that pays coupons annually is issued with a coupon rate of 4%, maturity of 30 years, and a yield to maturity of 7%.

A bond that pays coupons annually is issued with a coupon rate of 4%, maturity of 30 years, and a yield to maturity of 7%. What rate of return will be earned by an investor who purchases the bond and holds it for 1 year if the bond's yield to maturity at the end of the year is 8%?

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