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    Bond Valuation

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    Two years ago, you acquired a 10-year zero coupon, $1000 par value bond at a 12 percent YTM. Recently you sold this bond at an 8 percent YTM. Using semiannual compounding, compute the annualized horizon return for this investment.

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    Solution Preview

    First, you need to calculate the price you paid for the bond. You can use a financial calculator or Excel to determine the present value of the bond. I ...

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