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​(Bond valuation​) At the beginning of the​ year, you bought a ​$1,000 par value corporate bond...

​(Bond valuation​) At the beginning of the​ year, you bought a ​$1,000 par value corporate bond with an annual coupon rate of 11 percent and a maturity date of 18 years. When you bought the​ bond, it had an expected yield to maturity of 9 percent. Today the bond sells for ​$1,400.

a. What did you pay for the​ bond?

b. If you sold the bond at the end of the​ year, what would be your​ one-period return on the​ investment? Assume that you did not receive any interest payment during the holding period.

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Expert Solution

a)

jeff jeffy answered 1 year ago
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