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A $1,000 bond had a coupon rate of 4.90% with interest paid semi-annually. Caitlin purchased this bond when there were 8 years left to maturity
A $1,000 bond had a coupon rate of 4.90% with interest paid semi-annually. Caitlin purchased this bond when there were 8 years left to maturity and when the market interest rate was 7.50% compounded semi-annually. She held the bond for 3 years, then sold it when the market interest rate was 3.20% compounded semi-annually.
a. Calculate the purchase price of the bond.
$838.74
$554.87
$290.82
$845.69
b. Calculate Caitlin's selling price.
$893.23
$853.22
$1,077.97
$224.75
c. Calculate her gain or loss on this investment.
-$66.07
$232.28
$298.35
$54.49
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