A Bond with Three Years to Maturity Has a Face

question 72

Short Answer

A bond with three years to maturity has a face value of $1,000 and a coupon rate of 5%. It is initially bought at a yield to maturity of 7%, then sold after one year when market yields have fallen to 5%. What are the sale price and the rate of return for the first year?

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Definitions:

Embodiment

Refers to the physical and mental experience of existence.

Ableism

A system of belief that values individuals with certain abilities, leading to discrimination and social prejudice against people with disabilities.

Age Cohort

A group of individuals sharing a similar age, who undergo the same life experiences or historical events during a particular time period.

Disability

A physical or mental condition that limits a person's movements, senses, or activities, affecting their daily life and possibly requiring special accommodations.