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Suppose you purchase a 10-year bond with 6.7% 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 6.7% 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 5.1% 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? O A. Year 0 1 2 3 4 Cash Flows -$114.80 $6.70 $6.70 $6.70 $108.10 O B. Year 0 + + 1 Cash Flows $108.10 $6.70 $6.70 $6.70 $114.80 OC. Year + Cash Flows - $112.29 $6.70 $6.70 $6.70 $114.80 OD. Year 2 + + Cash Flows $112.29 $6.70 $6.70 $6.70 $114.80 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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