Texts: You bought a bond with a face value of $1,000 on January 1, 2023, with a maturity of December 31, 2033. You plan to sell this bond four years from now. Assume the coupon is paid annually at 10%. The interest rates are 10%, 12%, 14%, and 16% respectively for the next four years. The interest rate will remain at 16% beyond year 4.
Q6. When you sell this bond, the maturity left on this bond is …………… years.
Q7. The amount of the total reinvested coupons, when you sell the bond, is $ …………….. Assume the rates are locked when you reinvest each coupon.
Q8. The realized annual rate of return is ……………