The bond during the four year holding period

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1. Helen purchased a $1,000 face value 10-year bond with a 6% coupon (semi-annual payments) at par.

(a) How much did Helen pay for the bond?

(b) If Helen holds the bond until maturity, what is the annual return on her investment?

(c) If Helen sells the bond after 4 years when the yields on comparable bonds are 7%. What is her annual return (realized yield) on the bond during the four year holding period?

(d) Compare your answers in (b) and (c), which one is greater? Why?

Reference no: EM131975220

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