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Compute the annualized compound return

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The chief trader at AM Hedge Fund purchases a 20 year, 3.5% coupon bond [annual pay] at 98.5. She plans to hold it for 7 years. She asks her junior trader to compute the annualized compound return for the holding period using the following data: the bond's yield to maturity will be 4% when it is sold and the reinvestment rate on coupons is projected at 3.25%. Use horizon analysis to help the junior trader respond to the request.

Reference no: EM132719458

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