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An investor purchases a just-issued 10-year, 9.500% semiannual coupon note at 97.805 percent of par value and sells it after 5 years. The bonds yield
An investor purchases a just-issued 10-year, 9.500% semiannual coupon note at 97.805 percent of par value and sells it after 5 years. The bonds yield to maturity is 9.850% at time of sale, and rises to 10.100% immediately after the purchase but before the first coupon is received. Assume all coupons are reinvested to maturity at the new yield to maturity. What is the realized rate of return (horizon yield) after 5 years?
A. | 9.770% | |
B. | 9.850% | |
C. | 9.973% | |
D. | 10.100% |
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