Consider a 30-year 8 percent bond, paying coupon semi-annually, and selling for $896.81 today (note that the yield is 9 percent). Find the holding period return if the interest rate rises to 10 percent after six months. Make sure to annualize the rate.

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.