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Consider the same bonds as in the previous question. That is, two zero-coupon bonds and both have face value at $1000. Bond A is a

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Consider the same bonds as in the previous question. That is, two zero-coupon bonds and both have face value at $1000. Bond A is a 2 -year bond that you purchased at $775. Bond B is a 1-year bond that you purchased at $880. The yields on both bonds drop by 2 percentage points (original yield %2% ) soon after your purchase and never change again. Now at the end of the first year and after Bond B is paid in full $1000, the same bond is issued again (that is a 1year zero-coupon bond at face value $1000 ) and you reinvest your income from the initial Bond B, that is $1000, into another bond B. After two years from the beginning, your two-year holding period return from purchasing and reinvesting in Bond B is how much? 24.5% 29.0% None of the others are correct. 26.8%

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