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QUESTION

Assume you purchased a AA corporate bond with three years left to maturity today, which is trading at par. The current YTM on the bond is 3.

Assume you purchased a AA corporate bond with three years left to maturity today, which is trading at par. The current YTM on the bond is 3.95%. You also observe that the YTM on a two-year corporate bond with the same credit rating is 2.15%. If the year passes and interest rates do not change, what is the one year return you would make on the bond?

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