What is the total rate of return of a bond if your investment horizon is 2 years,

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What is the total rate of return of a bond if your investment horizon is 2 years, you are expected to reinvest coupons at 6% and your expected Yield To Maturity on the sale of the bond is 7% at the end of two years?

Bond info:

Coupon 4.5%

YTM 5%

Maturity 5

Par 100

Price 100

Frequency: (Semiannual)

Related Book For answer-question

Financial Management Theory and Practice

ISBN: 978-1305632295

15th edition

Authors: Eugene F. Brigham, Michael C. Ehrhardt

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Posted Date: May 08, 2024 11:47 AM

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What is the total rate of return of a bond if your investment horizon is 2 years,

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Expert Answer:

Heres how to approach it 1 Bond Information Coupon Rate 45 semiannual so 225 per coupon payment Yield to Maturity YTM 5 represents the annual return if held to maturity Maturity 5 years Par Value 100 ... View the full answer

Financial Management Theory and Practice

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