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3. An investor with a 5-year investment horizon is considering the purchase of 30-year 6%coupon bond selling for $850 and a par value of $1000.

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3. An investor with a 5-year investment horizon is considering the purchase of 30-year 6%coupon bond selling for $850 and a par value of $1000. The vield to maturity for the bond is 7.2%. Suppose the investor faces a reinvestment rate of 5% per year and anticipates selling the bond in 5 years to yield 6% on the 25-year remaining maturity in 5 years. Calculate his total return from the investment. (17 pt.)

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