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Suppose you purchase a 10-year bond with 6.5% 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 6.5% 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 4.9% 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 annual rate of return of your investment? B. Year 0 1 2 3 Cash Flows - $112.41 $6.50 $6.50 $6.50 $114.65 O C. Year 0 1 2 3 Cash Flows - $114.65 $6.50 $6.50 $6.50 $108.15 O D. Year 0 1 2 3 4 1 $6.50 Cash Flows $108.15 $6.50 $6.50 $114.65 b. What is the annual rate of return of your investment? The annual rate of return of your investment is %. (Round to one decimal place.)
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