Question: Problem 5 [10 points] Suppose you purchase a ten-year bond with 10% semi-annual coupons. Your strategy is to hold the bond for exactly four years

Problem 5 [10 points] Suppose you purchase a ten-year bond with

Problem 5 [10 points] Suppose you purchase a ten-year bond with 10% semi-annual coupons. Your strategy is to hold the bond for exactly four years and sell it immediately after receiving the last coupon payment in the fourth year. If the bond's yield to maturity was 5.00% (APR with semi-annual compounding) 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? [7 points] b) What is the internal rate of return of your investment strategy, expressed in APR and EAR? [3 points]

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