Maturity on a coupon bond and the rate of return

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1. What is the difference between the yield to maturity on a coupon bond and the rate of return?

2. What is interest-rate risk? Why does a bond with a longer maturity have greater interest-rate risk than a bond with a shorter maturity?

3. Suppose that for a price of $950 you purchase a 10-year Treasury bond that has a face value of $1,000 and a coupon rate of 4%. If you sell the bond one year later for $1,150, what was your rate of return for that one-year holding period?

Reference no: EM131305479

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