Suppose you purchase a 10-year bond with

6.9%

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

4.8%

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?

Question content area bottom

Part 1

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.)

A.The timeline starts at Year 0 and ends at Year 4. The timeline shows a cash flow of $ 116.37 in Year 0 and a cash flow of $ 6.90 each year from Year 1 to Year 3. In Year 4, the cash flow is $ 117.63.

Year

0

1

2

3

4

Cash Flows

$116.37

$6.90

$6.90

$6.90

$117.63

B.The timeline starts at Year 0 and ends at Year 4. The timeline shows a cash flow of negative $ 116.37 in Year 0 and a cash flow of $ 6.90 each year from Year 1 to Year 3. In Year 4, the cash flow is $ 117.63.

Year

0

1

2

3

4

Cash Flows

$116.37

$6.90

$6.90

$6.90

$117.63

C.The timeline starts at Year 0 and ends at Year 4. The timeline shows a cash flow of minus $ 117.63 in Year 0 and a cash flow of $ 6.90 each year from Year 1 to Year 3. In Year 4, the cash flow is $ 110.73.

Year

0

1

2

3

4

Cash Flows

$117.63

$6.90

$6.90

$6.90

$110.73

D.The timeline starts at Year 0 and ends at Year 4. The timeline shows a cash flow of $ 110.73 in Year 0 and a cash flow of $ 6.90 each year from Year 1 to Year 3. In Year 4, the cash flow is $ 117.63.

Year

0

1

2

3

4

Cash Flows

$110.73

$6.90

$6.90

$6.90

$117.63

Part 2

b. What is the annual rate of return of your investment?

The annual rate of return of your investment is

enter your response here%.

(Round to one decimal place.)