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Prob. 2 Horizon Analysis Suppose you buy a 30-year, 8% (annual payment) coupon bond for $990 and you plan to hold it for 10 years.
Prob. 2 Horizon Analysis Suppose you buy a 30-year, 8% (annual payment) coupon bond for $990 and you plan to hold it for 10 years. You forecast the bond's yield to maturity to be 9% when it is sold and the reinvestment rate on the coupons to be 6% for the first four years and 7% for the next six years. a. What is the forecasted sales price for the bond after 10 years? b. How much will the 10 coupon payments grow into by the end of the first 10 years? c. What is the realized compound return
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