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An investor purchases a 7-year, 7% semi-annual coupon bond at $85.8266 and sells it in 4 years at a 9.85% yield to maturity. (10 points)
An investor purchases a 7-year, 7% semi-annual coupon bond at $85.8266 and sells it in 4 years at a 9.85% yield to maturity. (10 points)
Show the sources of return of the investor by,
calculating interest on reinvested coupons
calculating sale price of bond at horizon
calculating realized rate of return by total dollar return and initial price
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