Q 31

A 20-year maturity bond pays interest of $90 once per year and has a face value of $1 000. Its yield to maturity is 10%. Over the upcoming year, you expect interest rates to decline and that the yield to maturity on this bond will only be 8% a year from now. Using horizon analysis, the return you expect to earn by holding this bond over the upcoming year is ________. A)10.0% B)12.0% C)21.6% D)29.6%

Multiple Choice