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Assume that you buy a 10 -year bond that will mature for $1,000 and pays $40 in coupon interest every six months. Also assume that
Assume that you buy a 10 -year bond that will mature for $1,000 and pays $40 in coupon interest every six months. Also assume that the current annual yield on this bond is 9 percent and that it is expected to stay at this rate over the life of the bond. Now assume that you plan to hold this bond for 5 years but that you will put any coupon income received in your checking account earning a zero percent interest rate (i.e., your reinvestment rate for the coupons is then zero). Given this information, determine the "realized compounded yield" you should expect to receive over this 5 -year period. Enter your answer in decimal format, rounded to 4 decimal places. For example, if your answer is 5.278%, enter "0.0528
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