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Problem 07.050 IRR of high-interest bond During recessionary periods, bonds that were issued many years ago have a higher coupon rate than currently issued bonds.
Problem 07.050 IRR of high-interest bond During recessionary periods, bonds that were issued many years ago have a higher coupon rate than currently issued bonds. Therefore, they may sell at a premium, a price higher than their face value, because of currently low coupon rates. A $50,000 bond that was issued 15 years ago is for sale for $64,000. What rate of return per year will a purchaser make if the bond coupon rate is 15% per year payable semi-annually, and the bond is due 5 years from now? The rate of return is | | % per year
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