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Bonds of Francesca Corporation with a par value of $1,000 sell for $940, mature in six years, and have a 7% annual coupon rate
Bonds of Francesca Corporation with a par value of $1,000 sell for $940, mature in six years, and have a 7% annual coupon rate paid semiannually. Do not round intermediate calculations. Round your answers to two decimal places. Calculate: a. current yield. 7.45 % annually b. yield to maturity, to the nearest basis point. 8.29 % annually c. horizon yield (or realized return) for an investor with a four-year holding period and a reinvestment rate of 5% over the period. At the end of four years, the 7% coupon bonds with two years remaining will sell to yield 7%. % annually
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