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An investor buys a newly issued annual bond that pays its coupons once a year. Its coupon rate is 12%, its maturity is 15 years,
An investor buys a newly issued annual bond that pays its coupons once a year. Its coupon rate is 12%, its maturity is 15 years, and its yield to maturity is 14.5%. a. At what price did the investor buy the bond? b. A year later the investor sells the bond when the bond's yield to maturity is 16.53%. What price did the investor sell the bond? c. What is bonds capital gains return (capital appreciation)? 1% d. What is the bond's current yield return (income return)? % e. What is the investor's one year holder period return (return)
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