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A government bond matures in 7 years, makes annual coupon payments of 5.1% and offers a...

A government bond matures in 7 years, makes annual coupon payments of 5.1% and offers a yield of 3.1% annually compounded. Assume face value is $1,000. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

a. Suppose that one year later the bond still yields 3.1%. What return has the bondholder earned over the 12-month period?

b. Now suppose that the bond yields 2.1% at the end of the year. What return did the bondholder earn in this case?

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jeff jeffy answered 7 months ago
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