Question
A 7.0 percent coupon bond with semi-annual coupon payments, 20 years left to maturity and $1,000 face value, is priced to offer a 7.5 percent
A 7.0 percent coupon bond with semi-annual coupon payments, 20 years left to maturity and $1,000 face value, is priced to offer a 7.5 percent yield to maturity today. You believe that in one year, the yield to maturity will be 8.0 percent. If this occurs, what would be the total return of the bond in percent if you purchase the bond today and hold it for one year?
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International Finance Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
10th edition
978-0133425895, 133425894, 978-0133423631, 133423638, 978-0133423648
