You hold the bond for four years and sell it immediately


Suppose you purchase a ten-year bond with 6% annual coupons.

You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.89% when you purchased and sold the bond.

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

b. What is the internal rate of return of your investment?

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