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Consider the following bond for questions 5 8 : Exactly 1 0 years to maturity 7 . 5 % yield to maturity 5 % coupon,
Consider the following bond for questions :
Exactly years to maturity
yield to maturity
coupon, paid semiannually
$ par value
Now suppose that, in exactly years, the yield on bonds of the same risk decreases to and you sell the bond at that time eg in exactly years What is your annualized rate of return in this scenario? Assume that coupons are reinvested at the prevailing yield.
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