A 675 Percent Coupon Bond with 10 Years Left to Maturity

A 6.75 percent coupon bond with 10 years left to maturity is priced to offer a 6.5 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.65 percent. If this occurs, what would be the total return of the bond in percent? (Assume semiannual interest payments and $1,000 par value.)

A) 5.5 percent
B) 5.6 percent
C) 6.6 percent
D) 6.7 percent

Correct Answer:

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