Question: You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 2.7% (EAR). You keep the bond for

You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 2.7% (EAR). You keep the bond for 5 years before selling it. The price of the bond today is P 0 = F ( 1 + r ) T = 1,000 1.027 10 = 766.12

If the yield to maturity is still 2.7% when you sell the bond at the end of year-5, what is your personal ANNUAL rate of return?

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