Determine effective rate of return if mike holds bond

Reference no: EM13214005

Mike buys a corporate bond with a face value of $1000 for $900. The bond matures in 10 years and pays a coupon interest rate of 6%. Interest is paid every quarter.

A). Determine the effective rate of return if Mike holds the bond maturity.

B).What effective interest rate will make get if he keeps the bond for only 5 years and sells it for $950?

Reference no: EM13214005

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