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You are considering buying a bond. The bond has a current price of $1,125, a coupon rate of 8% paid semiannually, a par value of
You are considering buying a bond. The bond has a current price of $1,125, a coupon rate of 8% paid semiannually, a par value of 1,000, and a maturity of 10 years. You plan to hold the bond for only 4 years, that is, to sell the bond at the end of year 4. You expect the interest rate for the bond at the time of sale to be 7%. What is your expected rate of return from this investment?
Select one: a. 5.57% b. 5.95% c. 6.33% d. 7%
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