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Q4) In Jan. 2005, suppose you bought a corporate bond issued by Ford Motor Company and Ford experienced some difficulties in 2005. When you bought
Q4) In Jan. 2005, suppose you bought a corporate bond issued by Ford Motor Company and Ford experienced some difficulties in 2005. When you bought the bond, it had 12 years left to maturity, and the yield to maturity was 6%. By January 2006, the yield to maturity had risen to 10%. Calculate your total percentage return on the bond (January 2005 to January 2006). Assume that you received one coupon payment during the period from Jan. 2005 to Jan. 2006 and the coupon rate was 6.5%.
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