Suppose you are holding a $5$ percent coupon bond maturing in one year with a yield to maturity of $12$ percent. If the interest rate on one$-$year bonds rises from $12$ percent to $15$ percent over the year, what is the yearly return on the bond you are holding?

Question $9$Answer

a$.$

$5$ percent

b$.$

$12$ percent

c$.$

$15$ percent

d$.$

$13\mathrm{.}5$ percent