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

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

Correct Answer:

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