Question
Investor pays $1,000 for 10-year 8% coupon bond; sells bond 3 years later for $902.63. Solve...
Investor pays $1,000 for 10-year 8% coupon bond; sells bond 3 years later for $902.63.
Solve for i such that $1,000 (the original investment) equals PV of 2 annual payments of $80 followed by a 3rd annual payment of $982.63 (the actual cash flows this investor received).
4.91%; What if the investor had paid $975 for the bond initially
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