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Suppose that you buy the five-year bond from Altos Hornos and plan to keep your money invested in bonds for five years, in such a
Suppose that you buy the five-year bond from Altos Hornos and plan to keep your money invested in bonds for five years, in such a way that you reinvest all the coupons that the bond pays you at 5% during the said period:
a) What is your compound rate of return (modified IRR)
b) That would have passed if the interest rate had risen to 10%
c) How would the results have differed if he had bought the 15-year bond instead of the five-year?
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