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Suppose you purchase a 10-year, 4% semi-annual coupon bond for 78.681. You plan to hold the bond until it matures and reinvest all coupons at
Suppose you purchase a 10-year, 4% semi-annual coupon bond for 78.681. You plan to hold the bond until it matures and reinvest all coupons at the prevailing yield for bonds of this risk level. Immediately after you purchase the bond, the yield for equivalently risk bonds decreases by 100 basis points. What will be your return on this investment in this scenario?
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