Excel File
You will earn the YTM on a bond if you hold the bond until maturity and if the interest rates do not change.
a. Suppose that today you buy a bond with an annual coupon rate of 5.5% for $865. The bond has 21 years to maturity. What rate of return do you expect/
b. Two years from now the YTM has declined by 1% and you decide to sell. What price will the bond sell for? What is the HPY on the investment?
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