Question
Suppose you purchase a ten-year bond with 4% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth
Suppose you purchase a ten-year bond with 4% 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 3.08% 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?
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Public Finance
Authors: Richard W. Tresch
2nd Edition
0126990514, 978-0126990515
