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Assume that you just bought a 3-year, $1,000 par value bond with a 10% annual coupon for $1,000. Suppose 1 year after you bought it,
Assume that you just bought a 3-year, $1,000 par value bond with a 10% annual coupon for $1,000. Suppose 1 year after you bought it, the going interest rate falls to 6% and remains at that level until the bond matures. What would be your annual expected rate of return on the bond over the 3-year holding period?
| 10.00% |
| 9.65% |
| 9.00% |
| 7.33% |
| 6.00% |
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