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A US Government 4% Coupon Bond Has 10 Years Remaining

Question 61

Multiple Choice

A US Government 4% coupon bond has 10 years remaining to maturity.The bond pays annual coupons and the next coupon is due in one year.The face value of the bond is $100.The bond is currently trading for $74.43 and yields 6%.Calculate your capital gain return if you buy the bond today,hold it for one year and sell it after the next coupon.(Assume that yields are expected to remain constant at the current level over the bond's life.)


A) 0.6%
B) 1.6%
C) 2.6%
D) 4%
E) 6%

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