Calculate the annual realized compound return

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Reference no: EM131927913

You purchased a bond at par on January 1. The coupon rate was 5% per year, paid annually. The maturity date was three years from the date of purchase, and the par value was $1,000. Assume that the reinvestment interest rate was 5% in the first year, 6% in the second year, and 3% in the third year. Calculate the annual realized compound return. Show your calculation.

Reference no: EM131927913

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