Question
Consider a 4-year annuity bond with annual cash payment of $100. It does NOT have a face value. Currently it sells for $316.98. What is
Consider a 4-year annuity bond with annual cash payment of $100. It does NOT have a face value. Currently it sells for $316.98.
What is the yield to maturity? Then assuming that periodic cash flows are reinvested at 10% and the market interest rates remain the same for the entire 4 years, what is the total cash you will receive from the bond if you sell it in 4 years.
Can you please explain the solution to this question with a financial calculator. Thank you.
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Personal Financial Planning
Authors: Lewis J. Altfest
2nd edition
1259277186, 978-1259277184
