Suppose You Are Holding a 5 Percent Coupon Bond Maturing

question 28

Multiple Choice

Suppose you are holding a 5 percent coupon bond maturing in one year with a yield to maturity of 15 percent. If the interest rate on one-year bonds rises from 15 percent to 20 percent over the course of the year,what is the yearly return on the bond you are holding?

• A)5 percent
• B)10 percent
• C)15 percent
• D)20 percent