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Suppose you purchase a 26-year, 5.16 percent coupon (annual payments) bond at par ($1,000) and you plan to sell it at the end of 6
Suppose you purchase a 26-year, 5.16 percent coupon (annual payments) bond at par ($1,000) and you plan to sell it at the end of 6 years at the prevailing market price. When you purchase the bond, your investment adviser predicts that similar bonds with 20 years to maturity will yield 6.9 percent at the end of 6 years. Calculate your expected yield. (You need to calculate expected sale price first).
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