21. Realized Yields (LO2, CFA6) Suppose you buy a 6 percent coupon bond today for $1,080. The...
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21. Realized Yields (LO2, CFA6) Suppose you buy a 6 percent coupon bond today for $1,080. The bond has 10 years to maturity. What rate of return do you expect to earn on your investment?
Two years from now, the YTM on your bond has increased by 2 percent, and you decide to sell.
What price will your bond sell for? What is the realized yield on your investment? Compare this yield to the YTM when you first bought the bond. Why are they different? Assume interest payments are reinvested at the original YTM.
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Related Book For 
Fundamentals Of Investments Valuation And Management
ISBN: 9781260013979
9th Edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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