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You are thinking of investing in the 3-year bond, with 8% coupon, and 1,000 ...

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Finance

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You are thinking of investing in the 3-year bond, with 8% coupon, and 1,000 nominal, currently selling at par. You plan to hold the bond for two years (.e. sell the bond in the moment in time 2) and to reinvest the coupon payments received from this bond. If the reinvestment and discount rate drop to 5% immediately after you buy the bond, what is the rate of return per annum that you would obtain

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