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Suppose you buy a bond with a yield to maturity of 5% (APR). This means you are paying a premium of 5% over its value.

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Suppose you buy a bond with a yield to maturity of 5% (APR). This means you are paying a premium of 5% over its value. your investment return will be 5% if you do not sell the bond and the issuer makes all of its payments. the bond's price will increase 5% at maturity. there is a 5% chance the issuer will default

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