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2. You bought a 5-year US Treasury Note paying a 4% coupon at issuance a year ago when market interest rates on competing investments paid
2. You bought a 5-year US Treasury Note paying a 4% coupon at issuance a year ago when market interest rates on competing investments paid 5%. You now think you might want to sell your note because market interest rates have recently fallen to 4%. If you do sell, what is your total rate of return assuming you held the note for exactly one year? (Hint: You must calculate your bond's price twice: Once when you buy it, and then again when you sell it.] 2. You bought a 5-year US Treasury Note paying a 4% coupon at issuance a year ago when market interest rates on competing investments paid 5%. You now think you might want to sell your note because market interest rates have recently fallen to 4%. If you do sell, what is your total rate of return assuming you held the note for exactly one year? (Hint: You must calculate your bond's price twice: Once when you buy it, and then again when you sell it.]
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