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Suppose you purchase a 10-year bond with 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 7% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bonds yield to maturity was 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 internal rate of return of your investment?
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Public Finance
Authors: Harvey S Rosen, Ted Gayer
9th International Edition
0071267883, 9780071267885
