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A 5-year government bond makes annual coupon payments of 5.8% and offers a yield of 3.8% annually compounded. Assume face value is $1,000. Note: Do
A 5-year government bond makes annual coupon payments of 5.8% and offers a yield of 3.8% annually compounded. Assume face value is $1,000. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. . a. Suppose that one year later the bond still yields 3.8%. What return has the bondholder earned over the 12-month period? b. Now suppose that the bond yields 2.8% at the end of the year. What return did the bondholder earn in this case?
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