Internal rate of return of your investment


Question: Suppose you purchase a ten-year bond with a 6% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yeild to maturity was 5% when you purchased and sold the bond.

1) What cash flows will you pay and receive from your investment in the bond per $100 face value?

2) What is the internal rate of return of your investment?

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Finance Basics: Internal rate of return of your investment
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