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Suppose that an investor with a three year investment horizon is considering purchasing a seven year 7 % coupon bond selling at par. The investor
Suppose that an investor with a three year investment horizon is considering purchasing a seven year coupon bond selling at par. The investor expects that he can reinvest the coupon payments at an annual interest rate of and that at the end of the investment horizon one year bonds will be selling to offer a yield to maturity of What are the total return and IOI in this investment? Suppose that an investor with a threeyear investment horizon is considering purchasing a sevenyear coupon bond selling at par. The investor expects that he can reinvest the coupon payments at an anmual interest rate of and that at the end of the investment horizon oneyear bonds will be selling to offer a yield to maturity of What are the total return and IOI interest on interest on this investment?
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