Question: Consider a bond with a $1,000 face value, 10 years to maturity, and $80 annual coupon interest payments. The bond sells at a price that

Consider a bond with a $1,000 face value, 10 years to maturity, and $80 annual interest payments. The bond sells at a price that produces a 10% yield-to-maturity. That yield is expected to decline to 9% at the end of 4 years. Interest income is assumed to be invested at 9.5%. Calculate the bond's 4-year holding period return and the four components of that return.

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