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Business, 04.05.2021 03:20 pnhandley01

Suppose that an investor with a 10-year investment horizon is considering purchasing a 20-year 8% coupon bond selling for $900. The par value of the bond is $1000. The original YTM on the bond is 10%, but the investor expects that he can reinvest the coupon payments at an annual interest rate of 7% and that at the end of the investment horizon this 10-year bond will be selling to offer a yield of 9%. What is the total return for this bond

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