Calculate the annualized holding period yield

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Assume you purchased a 5 year corporate bond with Face Value $1000 for $1010 two years ago. It pays 7 percent annual interest. You can sell the bond today for $1050.

a. Calculate the total return for your bond investment over the 2 years.

b. Calculate the annualized holding period yield.

c. Determine the yield to maturity of the bond if you sell it now.

d. Will you sell the bond if you anticipate interest rates to go down in the coming year? Why?

e. Name one other factor you will consider before making your decision in c). Explain.

Reference no: EM132924277

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