A bond that pays coupons annually is issued with a coupon rate of 4 percent, maturity...

A bond that pays coupons annually is issued with a coupon rate of 4 percent, maturity of 30 years, and a yield to maturity of 7 percent. What annual rate of return will be earned in the following situations by an investor who purchases the bond and holds it for 4 year if the bond’s yield to maturity when the investor sells is 8 percent? a) All coupons were immediately consumed when received. b) All coupons were reinvested in your bank account, which pays 2 percent interest until the bond is sold. c) All coupons were reinvested at 10.88 percent until the bond is sold.

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jeff jeffy answered 1 year ago

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