You Purchased a Five-Year Annual Payment 6 Percent Coupon Bond

question 60

Multiple Choice

You purchased a five-year annual payment 6 percent coupon bond for $1,000 and you planned on holding it to maturity. However,right after you bought the bond,it was called at $1,043.29 when all interest rates fell to 5 percent and remained there for the full five years. You reinvested the money for the full five years. What was your annual compound rate of return off your original investment?

• A)6.00 percent
• B)5.89 percent
• C)5.75 percent
• D)5.23 percent
• E)5.00 percent

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