You bought a bond with face value of $1,000 and 7% coupon rate (paid semi-annually) for $900.
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Question:
You bought a bond with face value of $1,000 and 7% coupon rate (paid semi-annually) for $900. After 6 months you received one coupon payment and then sold the bond for the same price. What effective rate of return did you earn on this investment?
Is the yield to maturity (YTM) of a bond the same as its expected return? Explain briefly.
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781264101566
11th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Alan J. Marcus
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