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Chapter 11 Managing Bond Portfolios 6 Help Check my A 30-year maturity bond has a 9% coupon rate, paid annually. It sells today for $987.42.

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Chapter 11 Managing Bond Portfolios 6 Help Check my A 30-year maturity bond has a 9% coupon rate, paid annually. It sells today for $987.42. A 20-year maturity bond has a 8.5% coupon rate, also paid annually. It sells today for $999.5. A bond market analyst forecasts that in five years, 25-year maturity bonds will sell at yields to maturity of 10% and that 15-year maturity bonds will sell at yields of 9.5%. Because the yield curve is upward-sloping the analyst believes that coupons will be invested in short-term securities at a rate of 8% a. Calculate the expected rate of return of the 30-year bond over the five-year period. (Do not round intermediate calculations Round your answer to 2 decimal places.) Expected rate of retum % b. What is the expected return of the 20-year bond? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Expected rate of retum

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