John buys the following Bond: Coupon = 8.0%, paid ANNUALLY (once per year) Face Value $1,000 Purchase Price = $1,000 Maturity = 5-years John plans on reinvesting all the coupon payments. If interest rates fall to 5.0% right after John purchases the bond, what is the realized return on John's investment if John holds the bond until it matures? 5.37% 8.28% 7.60% 6.50% 6.64% = A
John buys the following Bond: Coupon = 8.0%, paid ANNUALLY (once per year) Face Value $1,000 Purchase Price = $1,000 Maturity = 5-years John plans on reinvesting all the coupon payments. If interest rates fall to 5.0% right after John purchases the bond, what is the realized return on John's investment if John holds the bond until it matures? 5.37% 8.28% 7.60% 6.50% 6.64% = A
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:John buys the following Bond:
Coupon = 8.0%, paid ANNUALLY (once per year)
Face Value = $1,000
Purchase Price = $1,000
Maturity = 5-years
John plans on reinvesting all the coupon payments. If interest rates fall to 5.0% right after John
purchases the bond, what is the realized return on John's investment if John holds the bond until it
matures?
5.37%
8.28%
7.60%
O 6.50%
6.64%
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