You Purchased an Annual-Interest Coupon Bond One Year Ago with Six

question 2

Multiple Choice

You purchased an annual-interest coupon bond one year ago with six years remaining to maturity at the time of purchase.The coupon interest rate is 10%, and par value is $1,000.At the time you purchased the bond, the yield to maturity was 8%.If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 7%, your annual total rate of return on holding the bond for that year would have been

• A)7.00%.
• B)8.00%.
• C)9.95%.
• D)11.95%.

---

Definitions:

Andesite

A volcanic rock of intermediate composition, typically found in volcanic arcs associated with subduction zones.

Volcanic Domes

Rounded, bulbous formations of lava that accumulate near and around volcanic vents, often resulting from the slow extrusion of viscous lava.

Volcanic Glass

A type of rock that forms from the rapid cooling of magma without crystallization, resulting in a smooth, glassy texture.

Volcanic Dome

A rounded mound formed by the slow extrusion of viscous lava from a volcano.