Question
Two years ago, Mia paid $977.89 to buy a 10-year, 5% coupon bond and she sold the bond today. She had reinvested all the coupons
Two years ago, Mia paid $977.89 to buy a 10-year, 5% coupon bond and she sold the bond today. She had reinvested all the coupons received during the two years at an APR of 8%. The yield to maturity of the bond today is 6.5%, and the bond pays interest semi-annually. The face value of the bond is $1,000. What was the effective annual rate of return (EAR) on her investment?
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Principles Of Finance
Authors: Scott Besley, Eugene F. Brigham
3rd Edition
0324232624, 9780324232622
