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Bonds of the Abel & Crawford Corporation with a par value of $1,000 sell for $960, mature in 5 years, and have a 7 percent
Bonds of the Abel & Crawford Corporation with a par value of $1,000 sell for $960, mature in 5 years, and have a 7 percent semi-annual coupon rate. a. What is the bonds current yield? b. What is the bonds current yield-to-maturity (YTM)? c. What is the bonds horizon yield (or annualized total return) for an investor with a 3-year holding period and a reinvestment rate of 6 percent over that period? (Assume that at the end of the 3 years, the yield-to-maturity for similar bonds with 2 years left to run is 7%.)
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