A government bond matures in 5 years, makes annual coupon payments of 8.0% and offers a yield of 3.7% annually compounded. Assume face value is $1,000.

Now suppose that two years later the bond yields 5.7%. 

What return has the bondholder earned over the 24-month period?

Answer rating: 100% (QA)

Solution The return earned over the 24month period can be calculated using the following formu... View the full answer