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Suppose you buy a 5 0 - year, 5 . 5 % coupon bond when its YTM is 6 . 6 7 % and you
Suppose you buy a year, coupon bond when its YTM is and you plan to hold it for years. You forecast that the YTM will be when it is sold and the reinvestment rate on coupon payment will be What is your realized return over years of investment? Assume that bond pays semiannual coupon payment
How much do you pay for the bond?
How much can you sell you bond after years at the YTM of
What is the total value of your coupon payments at the end of years with reinvestment rate of
What is your realized return over year period?
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