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Problem 4.6 Sarah buys a 10-year $1,000 face value 6% bond with semi-annual coupons (i.e., the coupon rate is 6% compounded semi-annually). The price assumes
Problem 4.6 Sarah buys a 10-year $1,000 face value 6% bond with semi-annual coupons (i.e., the coupon rate is 6% compounded semi-annually). The price assumes a nominal annual yield of 6% compounded semi annually. Sarah re invests each coupon in a und paying an effective rate of % At the end of 10 years after the final coupon and redemption payment, Sarah has earned an effective yield of 7% on her investment in the bond. What is j
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