Suppose you purchase a 10-year bond with 6.19% annual coupons. You hold the bond for 4 years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5.34% 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? a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flows from the investment are shown in the following timeline: (Round to the best choice below.) A. Years 0 1 2 3 + Cash Flows $106.46 $6.19 $6.19 $6.19 $110.46 B. Years 0 2 3 + + Cash Flows $106.46 $6.19 $6.19 $6.19 $110.46 C. Years 2 3 + Cash Flows $104.27 $6.19 $6.19 $6.19 $110.46 ○ D. Years 2 3 4 Cash Flows - $110.46 $6.19 $6.19 $6.19 $104.27 b. What is the annual rate of return of your investment? The annual rate of return of your investment is ☐ %. (Round to two decimal places.)
Suppose you purchase a 10-year bond with 6.19% annual coupons. You hold the bond for 4 years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5.34% 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? a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flows from the investment are shown in the following timeline: (Round to the best choice below.) A. Years 0 1 2 3 + Cash Flows $106.46 $6.19 $6.19 $6.19 $110.46 B. Years 0 2 3 + + Cash Flows $106.46 $6.19 $6.19 $6.19 $110.46 C. Years 2 3 + Cash Flows $104.27 $6.19 $6.19 $6.19 $110.46 ○ D. Years 2 3 4 Cash Flows - $110.46 $6.19 $6.19 $6.19 $104.27 b. What is the annual rate of return of your investment? The annual rate of return of your investment is ☐ %. (Round to two decimal places.)
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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