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The price of a 10-year zero-coupon bond is $670 per $1000 in face value. What is its yield to maturity on this bond? If you
The price of a 10-year zero-coupon bond is $670 per $1000 in face value.
What is its yield to maturity on this bond?
If you buy this 10-year bond today (at t = 0) for $670, hold it for 5 years, and sell it then (when it is a 5-year zero) for $850, what is your holding period yield? If this happens, will the yield to maturity when you sell this bond be higher or lower than its current yield to maturity?
What price would this bond current 10-year zero have to sell for in 5 years for the holding period yield to be its current yield to maturity?
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