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N2 Jimmy owns a five-year government bond which has a principal amount of 5,000 and an annual coupon payment of 500 . After receiving the

N2

Jimmy owns a five-year government bond which has a principal amount of 5,000 and an annual coupon payment of 500 . After receiving the coupon payment on the fourth year of the bond (one year from maturity) Jimmy wishes to sell the bond. The interest rate on newly issued government bonds is3%. How much do you think Jimmy could sell the bond for? A. 5,000 B. 5,500 C. 4,500 D. 5,340 E. 4,660

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