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Consider the following transactions: a) You buy a 5-year bond with $100 face value and $3 semi-annual coupons at a nominal annual yield rate of

Consider the following transactions: a) You buy a 5-year bond with $100 face value

and $3 semi-annual coupons at a nominal annual yield rate of 7%, compounded semi-annually,

b) you receive the fifirst two semi-annual coupons, c) right after receiving the 2nd coupon (i.e.

in 1 year), you sell the bond at the then current nominal annual yield rate of 6%, compounded

semi-annually. Find the internal rate of return (IRR) expressed as a nominal annual rate,

compounded semi-annually.

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