Three years ago, you invested in a $1,000, 10 year, 6% semi-annual bond, paying a price of $970. You've just received a coupon payment for the end of the third year. Today, the bond can be sold for $1,050. If the probability of default is zero, what is the expected annualized return of the bond if you plan to hold 7 more years to maturity? 6.41% 3.21% 5.14% 2.57%
Three years ago, you invested in a $1,000, 10 year, 6% semi-annual bond, paying a price of $970. You've just received a coupon payment for the end of the third year. Today, the bond can be sold for $1,050. If the probability of default is zero, what is the expected annualized return of the bond if you plan to hold 7 more years to maturity? 6.41% 3.21% 5.14% 2.57%
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 17P
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Question
Three years ago, you invested in a $1,000, 10 year, 6% semi-annual bond, paying a price of $970. You've just received a coupon payment for the end of the third year. Today, the bond can be sold for $1,050. If the probability of default is zero, what is the expected annualized return of the bond if you plan to hold 7 more years to maturity?
6.41% |
||
3.21% |
||
5.14% |
||
2.57% |
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