Question: Consider a 5%-coupon bond with face value 100 maturing in 2 years that sells at 110 today. Next year, the price decreases to 108. Calculate

Consider a 5%-coupon bond with face value 100 maturing in 2 years that sells at 110

today. Next year, the price decreases to 108. Calculate all one-period returns and the

two-period return. State any assumption you make.

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