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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 paid

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:

  1. current yield.

    % annually

  2. yield to maturity, to the nearest basis point.

    % annually

  3. 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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