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Question
A bond has eight years to maturity and a coupon rate of 6.5 percent. Coupon payments are made annually and the bond has a face value of $1,000. The bond is currently selling in the market for $862. If this bond is sold at the end of four years for $1046 (ex-interest), what is the holding period return on this bond?
A. 6.5 percent
B. 12 percent
C. 9 percent
D. 6 percent
E. None of the options is correct
Answer
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