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Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor...

Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor A purchased the bond four years ago for $9,500.     The bond coupon rate is 8 percent per year paid annually and Investor A has just received the dividend for year 4.

  1. Draw the cash flow diagram for Investor A
  2. Calculate the Rate of Return for Investor A
  3. Draw the cash flow diagram for Investor B
  4. Investor B has a MARR of 10% per year compounded semi-annually. Will the return on the corporate bond meet the Investor B’s MARR?

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