Suppose that an investor with a two-year investment horizon


Suppose that an investor with a two-year investment horizon is considering purchasing a seven-year 9% coupon bond selling at par. The investor expects that he can reinvest the coupon payments at an annual interest rate of 10% and that at the end of the investment horizon the bond will be selling to offer a yield to maturity of 11%. What is the total return for this bond?

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Financial Management: Suppose that an investor with a two-year investment horizon
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