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What rate of return does each bond offer over the 5-year

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A 30-year maturity bond has a 5.6% coupon rate, paid annually. It sells today for $876.17. A 20-year maturity bond has 5.1% coupon rate, also paid annually. It sells today for $896.9. A bond market analyst forecasts that in 5 years, 25-year maturity bonds will sell at yields to maturity of 6.6% and 15-year maturity bonds will sell at yields of 6.1%. Because the yield curve is upward sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 7.1%. What rate of return does each bond offer over the 5-year period?

Reference no: EM132501045

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