A government bond matures in 30 years, makes semi-annual coupon payments of 6.0% ($120 per year) and offers a yield of 3.7% annually compounded. Assume face value is $1,000. Three years later the bond yields 2.7%. What return has the bondholder earned over the 36-month period?

A government bond matures in 30 years, makes semi-annual coupon payments of 6.0% ($120 per year) and offers a yield of 3.7% annually compounded. Assume face value is $1,000. Three years later the bond yields 2.7%. What return has the bondholder earned over the 36-month period?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 14P: Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has...

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Question

A government bond matures in 30 years, makes semi-annual coupon payments of 6.0% ($120 per
year) and offers a yield of 3.7% annually compounded. Assume face value is $1,000.
Three years later the bond yields 2.7%. What return has the bondholder earned over the 36-month
period?
O 25.6%
O 45.5%
23.5%
47.8%

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