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Suppose you purchase a ten-year bond with 6% semiannual coupons. You hold the bond for four years and sell it immediately after receiving the fourth
- Suppose you purchase a ten-year bond with 6% semiannual 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 5.00% when you purchased and 3% when you sold the bond, and reinvestment rate is 7.31% per year.
- What is the price when you buy the bond?
- What is the price when you sold the bond?
- What is the annualized return from this investment?
- Is this annualized return higher or lower than YTM? Explain your findings.
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Handbook Of Research On Global Issues In Financial Communication And Investment Decision Making
Authors: Hasan Dinçer , Serhat Yüksel
1st Edition
1522592652,1522592687
