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Suppose you purchase a 10-year bond with 6.6% 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 6.6% 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 5.2% 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? 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 - $113.66 $6.60 $6.60 $6.60 $107.06 OB. Year 0 1 4 2 L $6.60 3 L $6.60 Cash Flows $107.06 $6.60 $113.66 OC. Year 0 1 2 3 4 Cash Flows - $110.71 $6.60 $6.60 $6.60 $113.66 OD. Year 0 1 2 3 4 Cash Flows $110.71 $6.60 $6.60 $6.60 $113.66 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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