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You are strongly of the opinion that interest rates are going to fall within the...

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Accounting

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You are strongly of the opinion that interest rates are going to fall within the next six months. Consequently, you are considering investing in a twelve-year treasury bond that is currently trading at a yield to maturity of 3.25%. The bond has a coupon rate of 3.25% and pays coupon interest semi-annually. Your belief is that the yield to maturity on these bonds will fall by 50 basis points to 2.75% within the next six months. What percentage return will you earn if you buy the bonds now and sell them in six months, if your belief is realised? [Enter your answer as a percent with two decimal places. Do not use the percent sign. So, if your answer is 12.45 percent then just enter your answer as 12.45]

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