An investor purchases a $15-$year, $9\%$ annual coupon payment bond at a price equal to par

value. After the bond is purchased and before the first coupon is received, interest rates increase

by $1\mathrm{.}7\%.$ The investor sells the bond after $5$ years. Assume that interest rates remain unchanged

at $9+1\mathrm{.}7\%$ over the $5-$year holding period.

Assuming that all coupons are reinvested over the holding period, what is the investor's $5-$year horizon yield?

$7\mathrm{.}8001$ margin of error $+1\mathrm{.}1\%$

First, calculate the future value of all cash flows the investor has at time of sale, assuming reinvestment of coupons. Then find the average annual rate that would produce that value starting from the initial purchase price.