You are considering investing in the following bond: Current Price: $950 Coupon Rate: 5% (Coupons are paid semiannually.) Maturity: 20 years Par Value: $1,000. Your investment horizon is 4 years; that is, you plan to sell the bond 4 years later and you expect to reinvest the coupons received at 4% annually (2% semiannually). You also expect the bond to be priced to yield 6% in 4 years. Calculate your expected annualized rate of return over the 4-year investment horizon. Please write your answer using at least 4 decimal places.

Answer rating: 100% (QA)

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