Suppose that James just bought the same bond that Joan bought (info below), but he bought it
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Question:
Suppose that James just bought the same bond that Joan bought (info below), but he bought it two years later for $1,034.55. If James plans to hold his bond for five years and its YTM does not change during that period, what return will he earn each year? What portion of the annual return represents capital gains and what portion represents the current yield?
Suppose that Joan just bought a 15-year bond for $913.54. The bond has a coupon rate equal to 7 percent, and interest is paid semiannually.
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