Question: You own a bond that has a par value of $ 1,000 and matures in 5 years. It pays a 5 percent annual coupon rate.

You own a bond that has a par value of $ 1,000 and matures in 5 years. It pays a 5 percent annual coupon rate. The bond currently sells for $ 1,100. What is the bond’s expected rate of return?

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