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. Suppose that an investor with a five-year investmenthorizon is considering purchasing a seven-year 9% coupon bondselling at par. The investor expects that he can reinvest thecoupon payments at an annual interest rate of 9.4% and that at theend of the investment horizon two-year bonds will be selling tooffer a yield to maturity of 11.2%. What is the five-year totalreturn for this bond?
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