a. An 8%, five-year bond yields 6%. If the yield remains unchanged, what will be its price

Question:

a. An 8%, five-year bond yields 6%. If the yield remains unchanged, what will be its price one year hence? Assume annual payments.
b. What is the total return to an investor who held the bond over this year?
c. What can you deduce about the relationship between the bond return over a particular period and the yields to at the start and end of that period?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...