Question: A 1 0 - year maturity mortgage - backed bond is issued. The bond is a zero - coupon bond that promises to pay $

A 10-year maturity mortgage-backed bond is issued. The bond is a zero-coupon bond that
promises to pay $10,000(par) after 10 years. At initial issue, bond market investors require a
5.50 percent interest rate return on the bond. After holding the bond for five years you
decide to sell and bond market investors require an 8 percent interest rate return. What is
your annual yield for the five years you held the bond? Using financial calculator

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