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What is the rate of return per annum

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You are thinking of investing in the 5-year bond, with 10% coupon, and 1,000 € nominal, which is trading at par. You plan to hold the bond for three years (i.e. sell the bond in the moment in time 3) and to reinvest the coupon payments received from this bond. If the reinvestment and discount rate drop to 5% after you buy the bond what is the rate of return per annum that you would obtain?

Reference no: EM133068608

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