Calculate the realized compound return

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Consider a 10-year bond, with face value 1000, coupon rate 6% (annual coupon payment), selling at par. Suppose the coupons can be reinvested at 5% per year.

(1) Calculate the realized compound return.

(2) Suppose on the maturity date, the company only returns 60% of the par value to the investor (all coupons are paid in full). Recalculate the realized compound return.

Reference no: EM132696440

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