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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The Answer of 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?

A Bond with Three Years to Maturity Has a Face