You buy an 8% coupon, 10-year maturity bond for $980. A year later, the bond price is

Question:

You buy an 8% coupon, 10-year maturity bond for $980. A year later, the bond price is $1,200. (Assume annual coupon payments.)

a. What is the new yield to maturity on the bond?

b. What is your rate of return over the year?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...