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Exactly 10 years to maturity 7.5% yield to maturity 5% coupon, paid semi-annually $100 par value Now suppose that, instead of the yield dropping
Exactly 10 years to maturity 7.5% yield to maturity 5% coupon, paid semi-annually $100 par value Now suppose that, instead of the yield dropping in exactly 7 years, it decreased to 5% immediately after you purchased the bond. Continue to assume you will sell the bond in exactly 7 years and that you reinvest coupons at the prevailing yield. What is your annualized rate of return in this scenario?
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To calculate the annualized rate of return in the given scenario we need to consider the cash flows from the bond and the reinvestment of coupon payme...
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
