Assume you purchased a Caesars Bond two year ago for $802.47 when the market rate of interest (YTM) was 10%. This bond 30 years until maturity at the time of purchase and is contracted to pay a semiannual coupons at the rate of 7.5%. If the current market rate of interest (YTM) is 8%,

hint: First compute the price today taking into consideration of the fact that the bond has 2 years less left to maturity now.

a. What would be the holding period return for these two years? (6%) (here you should use (P1-P0+coupon)/P0.

b. What is the realized yield (stated in APR) for this bond for your two-year holding period? (12%)