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An investor purchases an 11-year, 8.1% annual coupon payment bond at a price equal to par value. After the bond is purchased and before the
An investor purchases an 11-year, 8.1% 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 1.9%. The investor sells the bond after 5 years. Assume that interest rates remain unchanged at 8.1+1.9% over the 5-year holding period. Assuming that all coupons are reinvested over the holding period, what is the investors 5-year horizon yield?
please show work on excel.
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