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A portfolio manager need to satisfy a cash flow in 4 years. He considers buying a US treasury bond with 12 years to maturity and
A portfolio manager need to satisfy a cash flow in 4 years. He considers buying a US treasury bond with 12 years to maturity and 6% coupon rate, currently priced to yield 4.2%. He can reinvest the coupon in 3% account. Assuming that in four years the bonds yield to maturity will decline to 4.0%, compute the investment total return.
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