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Suppose Ireton Insurance company has an investment horizon of four years and purchases corporate bonds in the secondary market with six years remaining to maturity
Suppose Ireton Insurance company has an investment horizon of four years and purchases corporate bonds in the secondary market with six years remaining to maturity for $577 million. Total par value is $550 million. The coupon rate is 8 percent, with annual interest payments. If the expected required rate of return in 4 years is 7 percent, what will be Ireton's yield if it sells the bonds at the end of their investment horizon? A. 6.971% B. 8.399% C. 6.959%
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