9. Bond returns (S3.1) a. An 8%, five-year bond yields 6%. If this yield to maturity remains...

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9. Bond returns (S3.1)

a. An 8%, five-year bond yields 6%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and a face value of $1,000.

b. What is the total return to an investor who held the bond over this year?

c. What can you deduce about the relationship between the bond return over a particular period and the yields to maturity at the start and end of that period?

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