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Suppose you purchase a 10-year bond with 6.0% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth
Suppose you purchase a 10-year bond with 6.0% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5.0% when you purchased and sold the bond, a. what cash flows will you pay and receive from your investment in the bond per $100 face value? b. what is the rate of return of your investment? a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flows from the investment are shown in the following timeline. (Round to the best choice below.) O A. Year 0 1 2 3 4 Cash Flows - $107.72 $6.00 $6.00 $6.00 $111.08 OB. Year 0 1 2 3 4 Cash Flows $105.08 $6.00 $6.00 $6.00 $111.08 OC. Year 0 2 3 4 Cash Flows $107.72 $6.00 $6.00 $6.00 $111.08 OD. Year 0 2 3 Cash Flows -$111.08 $6.00 $6.00 $6.00 $105.08
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