A 1 0 - year maturity mortgage - backed bond is issued. The bond is a zero
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Question:
A year maturity mortgagebacked bond is issued. The bond is a zerocoupon bond that promises to pay $par after years. At initial issue, bond market investors require a percent interest rate return on the bond. After holding the bond for five years you decide to sell and bond market investors require an percent interest rate return. What is your annual yield for the five years you held the bond?
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