4. On January 1, 2004, you purchased a two-year bond with a 10% semi-annual coupon for $1,000. The bond promised payments of $50 on 1 July 2004, 1 January 2005, 1 July 2005, and 1 January 2006. On this last date the issuer of the bond promised to repay the bonds face value of $1,000.

- What is the ex-ante rate of return you anticipate?

- What is the ex-post rate of return if you hold the bond until 1 January 2005 (getting the 1 January 2005 interest payment) and then sell the bond for $1,100?

PLEASE show formulas

Bond dates cash 1,000 50 50 50 1,050 1-Jul-04 4 1-Jul-05 J-010 6 8 Ex-ante return 9 Using IRR 10 Using XIRR 12 Computing the ex-post return 13 Bond dates cash 14 15 16 17 18 19 Ex-post return 20 Using IRR 21 Using XIRR 1-Jul-04