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A Bond Has Eight Years to Maturity and a Coupon

Question 71

Multiple Choice

A bond has eight years to maturity and a coupon rate of 6.5 percent.Coupon payments are made annually and the bond has a face value of $1,000.The bond is currently selling in the market for $862.If this bond is sold at the end of four years for $1046 (ex-interest) ,what is the holding period return on this bond?


A) 6.5 percent
B) 12 percent
C) 9 percent
D) 6 percent
E) None of the options is correct

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