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Hafu buys a 10-year bond with annual coupons. The par value of this bond is 10000 as is the redemption value, and it has an
Hafu buys a 10-year bond with annual coupons. The par value of this bond is 10000 as is the redemption value, and it has an annual coupon rate of 6%.
The price Hafu pays for the bond gives it an annual effective yield of 12%. Hafu has set up her investments so that the coupons are immediately deposited in a savings account with an annual effective rate of 9%. What is the annual effective yield (IRR) of Hafus overall investment over the 10-year term?
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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
978-0470317549, 9780470387085, 047031754X, 470387084, 978-0470533475
