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You are considering buying a 10% annual pay coupon bond with a $1,000 face value, and 15 years to maturity that costs $1,000 today. You
You are considering buying a 10% annual pay coupon bond with a $1,000 face value, and 15 years to maturity that costs $1,000 today. You expect to sell the bond in 4 years. At that time you expect the discount rate on similar bonds with similar risk to be 7%. If youre correct, the yield over the 4-year period is closest to (you don't have to calculate it, you should be able to guesstimate it): _______________________.
8%.
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10%
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14%
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20%
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