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Suppose the price of the bond in given problem falls from $90 to $85 over a year. Calculate the bond's rate of return over the year.

Problem

Suppose a bond has a face value of $100, annual coupon payments of $4, a maturity of 5 years, and a price of $90.

a. Write an equation that defines the yield to maturity on this bond.

b. If you have the right kind of calculator or software, calculate the yield to maturity.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91976586

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