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Practice Question: Last year you invested in a 5-year bond that makes annual coupon payments on a face value of $1,000. The coupon rate is
Practice Question:
Last year you invested in a 5-year bond that makes annual coupon payments on a face value of $1,000. The coupon rate is 8% per annum, and the bond was sold to you at par. Now one year has passed, you have just received the first coupon payment, and the bond currently trades at a yield to maturity of 7%. What percentage return have you earned during this one-year holding period?
A) 3.4%
B) 7.0%
C) 11.4%
D) 12.1%
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