Suppose you purchased, a 15-year, 8.87 percent coupon (annual payments) bond at par. You hold it for 2 years and sell it so that you can take a vacation to Virgin Islands. At the time you sell the bond, 13-year bonds with similar characteristics (e.g., default risk) sell at yields of 5.73 percent. Calculate bond's realized yield.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).

PLEASE SOLVE IT LIKE THE EXAMPLE BELOW

Suppose you purchased, a 23-year, 5.23 percent coupon (annual payments) bond at par. You hold it for 10 years and sell it so that you can take a vacation to Virgin Islands. At the time you sell the bond, 13-year bonds with similar characteristics (e.g., default risk) sell at yields of 5.3 percent. Calculate bond's realized yield.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).

Your Answer:

Step 1: Calculate the bond selling price in 10 years: We will be using Excel function PV: Rate 5.3% NPer 13 Pmt 52.3 FV 1000 Type 0 Get the answer $993.54 =PV(5.3%,13,52.3,1000,0) = $993.54 Step 2 Calculate the bond realized yield: We will be using Excel function RATE: NPer 10 Pmt 52.3 PV -1000 (must be entered as a negative number) FV 993.54 (entered as a positive number) Type 0 =RATE(10,52.3,-1000,993.54,0) = 7.36% (Excel shows the answer as a whole number. You should increase the number of decimals)