Question
Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8%, paid annually, and
Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8%, paid annually, and a face value of $1,000. Each year, you reinvested all coupon interest at the prevailing reinvestment rate shown in the table below. Today is the bond's maturity date. What is your realized compounded yield on the bond? (12 pts) Time 0 (purchase date) 1 2 3 (maturity date) Prevailing Reinvestment Rate 6% 7.2% 9.4 8.2%
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Principles Of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter
14th Global Edition
1292018208, 978-1292018201
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