Question
Consider a three year bond selling for $953.10 that pays an 8% coupon annually. Over the next three years, interest rates fluctuate, affecting the reinvestment
Consider a three year bond selling for $953.10 that pays an 8% coupon annually. Over the next three years, interest rates fluctuate, affecting the reinvestment rate of the coupons. The interest rates over the next three years are 8%, 10%, and 12% respectively.
1. What is the bond's ytm?
2. What is the realized compound yield?
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
7th Edition
1473778913, 978-1473778917
