The downside of the long-term bond investment story occurs during periods of rising long-term interest rates, when bond prices fall. During the two years preceding September 1981, the market rate of return on long-term bonds rose from 11% to 18.5%, compounded semiannually. Suppose you had purchased 10% coupon bonds with 22 years remaining until maturity in September 1979 and sold them in September 1981. What would have been your semiannually compounded rate of total return on the bonds during the two-year period?

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The Answer of The downside of the long-term bond investment story occurs during periods of rising long-term interest rates, when bond prices fall. During the two years preceding September 1981, the market rate of return on long-term bonds rose from 11% to 18.5%, compounded semiannually. Suppose you had purchased 10% coupon bonds with 22 years remaining until maturity in September 1979 and sold them in September 1981. What would have been your semiannually compounded rate of total return on the bonds during the two-year period?

The Downside of the Long-Term Bond Investment Story Occurs During