-9 G H 1 Answers are to be entered in the yellow-shaded areas. 2 3 Step 1: Find the coupon payments plus the interest-on-interest at the end of investment horizon. 4 Coupon rate (%) 7.25% 5 Years to maturity 14 6 Par value (MS) 100 7 YTM (%) 7.90% 8 Investment horizon (years) 3 9 Number of periods (n) 10 Semi-annual coupon payment (C.S) 11 Price value (5) 94.55 12 Coupon Semi-annual payments + reinvestment interest-on- 13 Reinvestment rate (%) rate (",) interest (S) 14 3.0% 15 3.5% 16 4.0% 17 4.5% 18 5.0% 19 5.5% 20 6.0% 21 6.5% 22 23 Step 2: Calculate the projected sale price (1.e., the horizon price). 24 Years to maturity 11 25 Number of periods (m) 26 Yield (end-of- Semi-annual Horizon Total future Semi-annual 27 Reinvestment rate (%) horizon,%) yield (",%) price (5) value ($) return (%) 28 3.0% 5.0% 29 3.5% 5.0% 30 4.0% 5.0% 31 4.5% 5.0% 32 5.0% 5.0% 33 5.5% 5.0% 34 6.0% 5.0% 35 6.5% 5.0% 36 3.0% 6.0% 37 3.5% 6.0% 38 4.0% 6.0% 39 4.5% 6.0% 40 5.0% 6.0% 41 5.5% 6.0% 42 6.0% 6.0% 43 6.5% 6.0% 44 3.0% 7.0% 45 3.5% 7.0% 46 4.0% 7.0% 47 4.5% 7.0% 48 5.0% 7.0% Effective total return 45 47 48 43 50 51 52 53 54 55 55 57 58 53 60 61 62 63 64 65 Eb 67 68 65 70 71 72 73 74 75 76 77 78 73 80 81 82 83 84 85 86 87 88 83 30 31 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.09% 6.5% 3.0% 3.5% 4.0% 4.5% 5.09% 5.5% 6.0% 6.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 3.0% 3.5% 4.06 4.5% 5.0% 5.5% 6.0% 6.5% 3.06 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 8.06 8.0% 8.06 8.06 8.00 8.06 8.06 8.06 9.0% 9.06 9.00 9.00 9.00 9.00 9.00 9.00 10.09% 10.09% 10.09% 10.09% 10.09% 10.06 10.06 10.06 11.09% 11.0% 11.06 11.05 11.06 11.06 11.0% 11.0% 12.0 12.06 12.06 12.06 12.06 12.06 12.06 12.06 -9 G H 1 Answers are to be entered in the yellow-shaded areas. 2 3 Step 1: Find the coupon payments plus the interest-on-interest at the end of investment horizon. 4 Coupon rate (%) 7.25% 5 Years to maturity 14 6 Par value (MS) 100 7 YTM (%) 7.90% 8 Investment horizon (years) 3 9 Number of periods (n) 10 Semi-annual coupon payment (C.S) 11 Price value (5) 94.55 12 Coupon Semi-annual payments + reinvestment interest-on- 13 Reinvestment rate (%) rate (",) interest (S) 14 3.0% 15 3.5% 16 4.0% 17 4.5% 18 5.0% 19 5.5% 20 6.0% 21 6.5% 22 23 Step 2: Calculate the projected sale price (1.e., the horizon price). 24 Years to maturity 11 25 Number of periods (m) 26 Yield (end-of- Semi-annual Horizon Total future Semi-annual 27 Reinvestment rate (%) horizon,%) yield (",%) price (5) value ($) return (%) 28 3.0% 5.0% 29 3.5% 5.0% 30 4.0% 5.0% 31 4.5% 5.0% 32 5.0% 5.0% 33 5.5% 5.0% 34 6.0% 5.0% 35 6.5% 5.0% 36 3.0% 6.0% 37 3.5% 6.0% 38 4.0% 6.0% 39 4.5% 6.0% 40 5.0% 6.0% 41 5.5% 6.0% 42 6.0% 6.0% 43 6.5% 6.0% 44 3.0% 7.0% 45 3.5% 7.0% 46 4.0% 7.0% 47 4.5% 7.0% 48 5.0% 7.0% Effective total return 45 47 48 43 50 51 52 53 54 55 55 57 58 53 60 61 62 63 64 65 Eb 67 68 65 70 71 72 73 74 75 76 77 78 73 80 81 82 83 84 85 86 87 88 83 30 31 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.09% 6.5% 3.0% 3.5% 4.0% 4.5% 5.09% 5.5% 6.0% 6.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 3.0% 3.5% 4.06 4.5% 5.0% 5.5% 6.0% 6.5% 3.06 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 8.06 8.0% 8.06 8.06 8.00 8.06 8.06 8.06 9.0% 9.06 9.00 9.00 9.00 9.00 9.00 9.00 10.09% 10.09% 10.09% 10.09% 10.09% 10.06 10.06 10.06 11.09% 11.0% 11.06 11.05 11.06 11.06 11.0% 11.0% 12.0 12.06 12.06 12.06 12.06 12.06 12.06 12.06