Question
1. Suppose that you bought a 10-year annual coupon bond with 8% coupon rate and a face value of $1000. At that time the YTM
1. Suppose that you bought a 10-year annual coupon bond with 8% coupon rate and a face value of $1000. At that time the YTM was 6-percent. One year later after you received your first coupon payment, you sold the bond when the YTM changed to 4-percent. What was your holding period return?
| 6.00% |
| 13.09% |
| 20.07% |
| 22.42% |
| None of the above |
2. Which of the following is TRUE?
| T-Bills generally yield a higher return than common stocks. |
| Long-term corporate bonds generally yield a higher return than common stocks. |
| Bonds with higher YTM will sell at a higher market price than otherwise identical bonds with lower YTM. |
| The nominal interest rate exceeds the real interest rate when inflation is greater than zero. |
| None of the above |
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