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Again, Inc. bonds have a par value of $1,000, a 28 year maturity, and an annual...

Again, Inc. bonds have a par value of $1,000, a 28 year maturity, and an annual coupon rate of 8.0% with annual coupon payments. The bonds are currently selling for $1,037. The bonds may be called in 3 years for 108.0% of par. What quoted annual rate of return do you expect to earn if you buy the bonds and company calls them when possible?

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Answer #1

Using excel we see that the annual rate of return earned=RATE(3,8%*1000,-1037,108%*1000)=8.98%

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