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A 3 0 - year maturity bond has a 9 % coupon rate, paid annually. It sells today for $ 8 9 7 . 4
A year maturity bond has a coupon rate, paid annually. It sells today for $ A year maturity bond has a coupon rate, also paid annually. It sells today for $ A bond market analyst forecasts that in five years, year maturity bonds will sell at yields to maturity of and that year maturity bonds will sell at yields of Because the yield curve is upwardsloping, the analyst believes that coupons will be invested in shortterm securities at a rate of
Required:
a Calculate the expected rate of return of the year bond over the fiveyear period. Do not round intermediate calculations. Round your answer to decimal places.
b What is the expected return of the year bond over the fiveyear period? Do not round intermediate calculations. Round your answer to decimal places.
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