If the investor buys the bond at the going price and holds

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An investor is interested in purchasing a new 20-year government bond carrying a 10 percent annual coupon rate with interest paid twice a year. The bond's current market price is $875 for a $1,000 par value instrument. If the investor buys the bond at the going price and holds it to maturity, what will be his or her yield to maturity? Suppose the investor sells the bond at the end of 10 years for $950. What is the investor's holding-period yield?

Reference no: EM13484178

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