What is the rate of return of your investment


Problem

Suppose you purchase a 10-year bond with 6.4% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.7% when you purchased and sold the bond,

1. What cash flows will you pay and receive from your investment in the bond per $100 face value?
2. What is the rate of return of your investment?

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Finance Basics: What is the rate of return of your investment
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