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A bondholder purchased an 8 percent coupon, $1,000 par three-year bond at a 7 percent yield. Interest rates then immediately fell to 6 percent and
A bondholder purchased an 8 percent coupon, $1,000 par three-year bond at a 7 percent yield. Interest rates then immediately fell to 6 percent and his bond was called at a price of $1,040. He reinvested his money and earned 6 percent on the $1,040 for three years. Did the call help or hurt the bondholder?
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