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Suppose you purchase a​ 10-year bond with 6.1 % annual coupons. You hold the bond for...

Suppose you purchase a​ 10-year bond with 6.1 % 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 4.7 % 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?

Solutions

Expert Solution

The net cash flow received from bond is $20.60 and annual rate of return on investment is 4.7%. The calculation for these are shown below

Following shows the working

jeff jeffy answered 1 week ago
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