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Fin 6406 Final Exam Possible Problems 65. The yield—to—maturity on a bond is the interest rate you earn on your investment if interest rates do not
change and you hold the bond until maturity. If you actually sell the bond before it matures, your realized return is known as the holding period yield. Suppose that today you buy a 9 percent annual coupon bond for $1,000.
The bond has 12 years to maturity. Three years fi'om now, the yield—to-maturity in the market for similar bonds has declined to 7 percent and you decide to sell. What is your holding period yield?

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