Question: USING A FINANCIAL CALCULATOR HOW TO SOLVE THIS PROBLEM An 8%, five year bond yields 6%. If this yield to maturity remains unchanged, what will

USING A FINANCIAL CALCULATOR HOW TO SOLVE THIS PROBLEM

An 8%, five year bond yields 6%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and face value of $100.

What is the total return to an investor who held the bond over this year?

What can you deduce about the relationship between the bond return over a particular period and the yield to maturity at the start and end of that period? So just assume bond yield to be 6% or 10% and recalculate total returns and compare the results.

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