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Sara decides to buy a 6 percent, 10-year straight- coupon bond for $100, which pays annual coupons of $6 at the end of each year.
Sara decides to buy a 6 percent, 10-year straight- coupon bond for $100, which pays annual coupons of $6 at the end of each year. At the end of the first year, the bond is trading at $115. At the end of the second year, the bond trades at $100 a. What is Sara's return over the first year? b. What is Sara's return over the second year? c. What is the average return per year for the two- year period? Use the arithmetic average
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