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Five years ago, you purchased a corporate bond for $942.41. At the time, the bond had a YTM of 10% and 9 years left to
Five years ago, you purchased a corporate bond for $942.41. At the time, the bond had a YTM of 10% and 9 years left to maturity. Today, the YTM on your bond is 8%. With this information, calculate the realized rate of return on the bond knowing that you bought the bond five years ago, you sold the bond today, you never reinvested the coupons paid on the bond, and the coupon rate on the bond is (9%,2). Keep 4 decimals in your answer (e.g., .0125, which means 1.25%) Answer: Five years ago, you purchased a corporate bond for $942.41. At the time, the bond had a YTM of 10% and 9 years left to maturity. Today, the YTM on your bond is 8%. With this information, calculate the realized rate of return on the bond knowing that you bought the bond five years ago, you sold the bond today, you never reinvested the coupons paid on the bond, and the coupon rate on the bond is (9%,2). Keep 4 decimals in your answer (e.g., .0125, which means 1.25%)
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