Multiple Choice
A US Government bond has 10 years remaining to maturity,pays annual coupons (yesterday) of $40,and has a face value of $1,000.The current price of the bond is $1,085.30 to yield 3%.If you buy the bond today,hold it for one year and sell it after the next coupon,then what return will you earn for the year? (Assume that yields are expected to remain constant at the current level over the bond's life.)
A) 3%
B) 3.25%
C) 3.5%
D) 3.69%
E) 4%
Correct Answer:
Verified
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