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On November 15, 2013, you purchased the Treasury bond issued with November 15, 2043 maturity and 3.75% coupon rate (with semiannual coupon payments). The bond
On November 15, 2013, you purchased the Treasury bond issued with November 15, 2043 maturity and 3.75% coupon rate (with semiannual coupon payments). The bond was priced to yield 3.81%. You are planning to keep the bond for 13 years and then sell it. You expect the yield to maturity at the time of the sale to be 4.35%. Also, you believe that you will be able to reinvest the coupon payments at an annual rate of 0.5%. Calculate the expected annual percentage return of your investment. (Assume that the T-bond has a face value of $1,000.)
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