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    Convertible Bonds from Investors

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    An investor is considering the purchase of an 8%, 18-year corporate bond that's being priced to yield 10%. She thinks that in a year, this same bond will be prices in the market to yield 9%. Using annual compounding, find the price of the bond today and in 1 year. Next, find the holding period return on this investment, assuming that the investor's expectations are borne out.

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    Solution Summary

    The solution examines convertible bonds from investors. The expert finds the holding period return on this investment.