What rate of return will actually earn

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Problem 1: Exactly one year ago you bought a five-year, $1,000 bond with an 7% coupon and a 5% yield to maturity (YTM). Just after you bought the bond, the YTM fell to 3%. If you hold the bond to maturity, what rate of return will you actually earn?

Multiple Choice

Option 1: 8.42%
Option 2: 9.13%
Option 3: 4.77%
Option 4: 6.56%

Reference no: EM132948830

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