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If you buy a 25-yr, 6% annual coupon bond for $883.46 (when YTM is 7%) and plan to hold it for 15 yrs. If you
If you buy a 25-yr, 6% annual coupon bond for $883.46 (when YTM is 7%) and plan to hold it for 15 yrs. If you forecast the YTM will be 7.50% when it is sold in 15 yrs, while the reinvestment rate is expected to be 6.6% in the first 15 years, what is your average annual rate of return (horizon yield)?
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