Question

# You purchase a 8 - year bond for \$1,015. It pays a semi-annual coupon payment of...

You purchase a 8 - year bond for \$1,015. It pays a semi-annual coupon payment of \$40. You expect to sell the bond in 2 years. You estimate that similar bonds will be priced to yield 7% at the time of the sale. If you can reinvest the coupon payments at 6% annually, what is your expected total return for the 2 - year holding period?

 1) 9.23%
 2) 5.73%
 3) 7.58%
 4) 8.71%
 5) 6.59%

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