You buy a bond today with market price of $1200, with a coupon rate of 10%, par value of $1000, and maturity of 10 years. If you sell your bond at the end of 5th year at price of $1045 after receiving coupon payment of that year, what is the annual realized returns on your bond investment? Assume coupon payment are on annual basis. 10% 7.13% 5.34% 2.69% 6.04%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You buy a bond today with market price of $1200, with a coupon rate of 10%, par
value of $1000, and maturity of 10 years. If you sell your bond at the end of 5th year at
price of $1045 after receiving coupon payment of that year, what is the annual realized
returns on your bond investment? Assume coupon payment are on annual basis.
10% 7.13% 5.34% 2.69% 6.04%
Transcribed Image Text:You buy a bond today with market price of $1200, with a coupon rate of 10%, par value of $1000, and maturity of 10 years. If you sell your bond at the end of 5th year at price of $1045 after receiving coupon payment of that year, what is the annual realized returns on your bond investment? Assume coupon payment are on annual basis. 10% 7.13% 5.34% 2.69% 6.04%
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