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What was effective rate of return over the year

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Reference no: EM131750014

Question: One year ago you bought a newly issued 1 5-year bond with a face value of $ 1 ,000 and a coupon rate of 18 percent payable annually. Market interest rates have since fallen, and today the bond is priced to yield 13 percent.

(a) Assuming that you sell the bond today, what price would you obtain?

(b) What was your effective rate of return over the year?

Reference no: EM131750014

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