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The UK government issues a 5-year bond, which makes annual coupon payments of 5...

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The UK government issues a 5-year bond, which makes annual

coupon payments of 5% and offers a yield of 3% annually compounded. Suppose

that one year later the bond still yields 3%. What return has the bondholder

earned over the 12-month period?

0%
33%
0%
67%
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