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You purchase a bond with 10% annual coupon rate and $1,000 face value. The bond has 4 years to maturity. You pay $951 for this
You purchase a bond with 10% annual coupon rate and $1,000 face value. The bond has 4 years to maturity. You pay $951 for this bond, which means that this bond yields 11.6%p.a. You decide to sell this bond in one year; right after the issuer makes a coupon payment. If the market interest rates at the time of sale have decreased to 6%p.a., what is your (nominal) realized rate of return?
a) 30.2%
b) 26.9%
c) 20.7%
d) 16.4%
e) 5.15%
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