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You purchase a 9-year bond at $95 per $100 par value that pays a 6% coupon per annum. Further assume that bond pays coupon semi-annually,
You purchase a 9-year bond at $95 per $100 par value that pays a 6% coupon per annum. Further assume that bond pays coupon semi-annually, and coupons can be reinvested at 3.6% semi-annually for first 6 years. The yield to maturity of a (9-6)-years comparable bond after 6 years is 8%. If you hold the bond for 6 years, what will be your total return?
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