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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
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 4.5% 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 -$119.28 $6.90 $6.90 $6.90 $112.38 0 2 3 4 Cash Flows $118.99 $6.90 $6.90 $6.90 $119.28 0 1 2 3 4 Cash Flows $6.90 $6.90 $6.90 $119.28 $112.38 0 2 3 4 Cash Flows - $118.99 $6.90 $6.90 $6.90 $119.28 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.) B. Year OC. Year D. Year
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