What is the yield to maturity (annual compounding) on the bond? Assume the YTM on comparable zeros..

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What is the yield to maturity (annual compounding) on the bond?

Assume the YTM on comparable zeros increases to 7% immediately after purchasing the bond and remains there. Calculate the annual return (holding period yield) if you sell the bond after one year

Assume yields to maturity on comparable bonds remain at 7%, calculate your annual return if you sell the bond after 2 years

Suppose after 3 years, the YTM on similar zeros declines to 3%. Calculate the annual return if you sell the bond at that time

If yield remains at 3%, calculate your annual return after 4 years

After 5 years

What explains the relationship between annual returns calculated in (b) through (f) and the YTM in (a)

 

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