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Classic Furniture of North Carolina, Inc. issued a 30-year bond with a coupon rate of 4.5% paid annually and a yield to maturity of 7%.
Classic Furniture of North Carolina, Inc. issued a 30-year bond with a coupon rate of 4.5% paid annually and a yield to maturity of 7%. What rate of return will the investor earn who purchases the bond for $750.61 and holds it for a year if the bond's YTM at the end of the year is 8.25%? (Hint: calculate the price of the bond with the new YTM a year from the purchase, then calculate the rate of return.)
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