Assume That You Purchase a 3-Year $1,000 Par Value Bond,with

question 50

Multiple Choice

Assume that you purchase a 3-year $1,000 par value bond,with a 8% coupon,and a yield of 10%.After you purchase the bond,one-year interest rates are as follow,year 1 = 10%,year 2 = 8%,year 3 = 6% (these are the reinvestment rates) .Calculate the realized horizon yield if you hold the bond to maturity.Interest is paid annually.

• A) 8.37%
• B) 7.28%
• C) 9.76%
• D) 10.67%
• E) 14.0%

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Definitions:

Germinal

Relating to the initial stage of development after fertilization, in which cell division and implantation in the uterus occur.

Embryonic

Pertaining to the initial stages of development after fertilization and before fetal stage in organisms.

Fetal Periods

Stages of human development in the womb, from conception to birth, marked by rapid growth and organ formation.

Trimesters

The three periods of approximately three months each into which pregnancy is divided, marking different phases of fetal development.