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Suppose you purchase a 1 0 - year bond with 6 . 5 9 % annual coupons. You hold the bond for 4 years, and
Suppose you purchase a year bond with annual coupons. You hold the bond for years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was
when you purchased and sold the bond,
a what cash flows will you pay and receive from your investment in the bond per $ face value?
b what is the annual rate of return of your investment?
a What cash flows will you pay and receive from your investment in the bond per $ face value?
The cash flows from the investment are shown in the following timeline: Round to the best choice below.
A Years
B Years
Cash Flows
C Years
Cash Flows
D Years
Cash Flows
$
$
$
$
$
b What is the annual rate of return of your investment?
The annual rate of return of your investment is
Round to two decimal places.
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