Homework Help: Finance

Posted by nick on Sunday, September 30, 2012 at 5:49am.

1.You buy a SML Bond for $980. The bond has a face value of $1000 and an annual coupon rate of 8%. There are 5 years left until maturity.
Because of a special delivery by the stork, you decide to sell the bond at the end of year 2 for $1050. What was your return? Why does this differ from the yield to maturity? Assume you do get the first two coupon payments.

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