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Last year Janet purchased a $1,000 face value corporate bond with an 8% annual coupon rate and a 15-year maturity.

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Last year Janet purchased a $1,000 face value corporate bond with an 8% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 10.45%. If Janet sold the bond today for $820.17, what rate of return would she have earned for the past year?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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First we must find the price Janet paid for this bond N 15 I YR 10 45 PMT 80 …View the full answer


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Fundamentals of Financial Management

Fundamentals of Financial Management

ISBN: 978-1305635937

Concise 9th Edition

Authors: Eugene F. Brigham

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Question Details
Chapter # 7
Section: Exercise Questions
Problem: 17
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Question Posted: April 06, 2018 03:07:22
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