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Assume that you buy a 22-year maturity bond, with a 3% coupon rate paid semiannually, for $950, and plan to hold it for 15 years.
Assume that you buy a 22-year maturity bond, with a 3% coupon rate paid semiannually, for $950, and plan to hold it for 15 years. Your forecast is that the bonds yield to maturity will be 4.5% per annum when it is sold and that the re-investment rate on the coupons will be 2% per annum. Find the expected semi-annual compound return at the end of investment horizon. Show your steps of calculation.
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