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6 years ago you bought a bond with a par value of $1000 for $877. The bond has a coupon rate of 4%. You purchased
6 years ago you bought a bond with a par value of $1000 for $877. The bond has a coupon rate of 4%. You purchased the bond for $877. You collected the first coupon five years ago and you reinvested it at a rate of 7%. The coupon you collected four years ago was reinvested at 6%. The one you collected three years ago was reinvested at 8%. The coupons collected two years ago and last year were not invested. Now, after collecting the current coupon, you sold the bond for $985. What the realized yield of this investment? The answer is 6.253
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