Question
Move forward in time from the story told in questions 15 and 16. Recall that the investor bought the Rhode Island Roadways Corporation bond for
Move forward in time from the story told in questions 15 and 16. Recall that the investor bought the Rhode Island Roadways Corporation bond for $968 four years after it was originally issued. Now, eighteen years after it was issued, the holder decides to sell the bond for its new market price of $951. (We can assume that interest rates have risen slightly and steadily over the years since the original issue date, such that Rhode Island has had no motivation to call the bonds.) QUESTION: PLEASE REFER TO THE ATACHMENT TO QUESTION 17 IN ANSWERING. Which of the five equations shown would you use in computing the bond holder's (14-year) HOLDING PERIOD YIELD?
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