Question: Suppose you purchase a 1 0 - year bond with 3 % annual coupons. You hold the bond for four years and sell it immediately
Suppose you purchase ayear bond with 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 when you purchased and sold the bond, what cash flows will you pay and receive from your investment in the bond per $ face value? At time time and time Additionally, what is the internal rate of return of your investment?
Note: Assume annual compounding.
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