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What annual rate of return would have made on the bond

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Reference no: EM132893608

Suppose that General Motors Acceptance Corporation issued a bond on 1st of January 2010 with 10 years until maturity, a face value of £100, and a coupon rate of 8% (annual payments). The yield to maturity on this bond when it was issued was 7%.

Problem a) What was the price of this bond when it was issued?

Problem b) Assuming the yield to maturity remains constant, what annual rate of return would you have made on the bond if you had bought it when it was issued and sell it one year later?

Reference no: EM132893608

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