An Investor Buys a 10-Year Annual Coupon Bond at a Yield

question 4

Multiple Choice

An investor buys a 10-year annual coupon bond at a yield of 8.7% and sells it 2 years later when it still yields 8.7%.What is his rate of return over this period?

• A) zero.
• B) 8.7%.
• C) Can't say without knowing the coupon.
• D) 17.4%.

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Definitions:

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The patterned network of relationships and social interactions that define a society or a group within a society.

Norms

Shared rules or guidelines within a society or group that dictate appropriate and acceptable behaviors, values, and beliefs.

Prescriptive

Describes an approach or rule that indicates how things should be done, setting standards or norms for behavior.

Proscriptive

Relating to prohibitions or restrictions, especially in terms of rules or laws.