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An investor purchases a 10-year par value bond with the face value 1000 that pays a 6% annual coupon. Based on the bond's purchase price,
An investor purchases a 10-year par value bond with the face value 1000 that pays a 6% annual coupon. Based on the bond's purchase price, its yield to maturity is 5.8%. After 8 years (when the bond has only 2 years remaining to maturity), the investor sells the bond at a price such that the buyer will realize a 4.1% yield to maturity. Calculate: 1) The investor's annual effective yield over the 8-year period that the bond was owned. 2) The yield if the bond had been sold with a 2-year yield to maturity of 6%
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