Find the holding period return on the investment, Financial Management

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Find the holding period return on the investment

Problem

An investor is considering the purchase of a(n) 6.500%, 15-year corporate bond that's being priced to yield 8.500%. She thinks that in a year, this bond will be priced in the market to yield 7.500%.

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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Financial Management: Find the holding period return on the investment

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