You have just purchased a 12-year zero-coupon bond with a yield to maturity of 9% and a par value of $1,000. What would your rate of return at the end of the year be if you sell the bond? Assume the yield to maturity on the bond is 10% at the time you sell.
A) 10.00%
B) 20.42%
C) −1.68%
D) 1.4%
Correct Answer:
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