Homework Help: Finance

Posted by Tony on Saturday, October 9, 2010 at 12:47am.

Please help me out this problem! :)

suppose that I buy a 10 yr bond today for $1000 and the interest rate when the bond is issued is 5 percent. the day after I buy the bond, the market interest rate on 10yr bonds rises to 7percent. if I keep the bond for the full 10 yrs until it matures, what is the bond's average annual return?

Hmm, please help me T.T

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