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ItisnowJanuary1,2013,andyouareconsideringthepurchaseofanoutstandingbond thatwasissuedonJanuary1,2012.Ithasa7percentannualcouponandhada30year originalmaturity.(ItmaturesonDecember31,2041.)Therewere7yearsofcall protection(untilDecember31,2018),afterwhichtimeitcanbecalledat108percentof par,or$1,080.Interestrateshavefallensincethebondwasissued,anditisnowselling at114percentofpar,or$1,140.Ifyouboughtthisbond,whatrateofreturnwouldyou probablyearn,assumingyouholdthebondsuntiltheyeithermatureorarecalled?
ItisnowJanuary1,2013,andyouareconsideringthepurchaseofanoutstandingbond thatwasissuedonJanuary1,2012.Ithasa7percentannualcouponandhada30year originalmaturity.(ItmaturesonDecember31,2041.)Therewere7yearsofcall protection(untilDecember31,2018),afterwhichtimeitcanbecalledat108percentof par,or$1,080.Interestrateshavefallensincethebondwasissued,anditisnowselling at114percentofpar,or$1,140.Ifyouboughtthisbond,whatrateofreturnwouldyou probablyearn,assumingyouholdthebondsuntiltheyeithermatureorarecalled?
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