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Suppose you buy a 25-year, 4% (annual payment) coupon bond for $1000 (i.e., the bond is selling at par) and you plan to hold it
Suppose you buy a 25-year, 4% (annual payment) coupon bond for $1000 (i.e., the bond is selling at par) and you plan to hold it for 16 years. You forecast that the bond's yield to maturity will be 7% when it is sold and that the reinvestment rate on the coupons will be 6%. What will be your annualized compound return over your investment horizon of 20 years
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