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You buy a $1,000 par value bond with a 7.5% coupon rate today for a price of $874.95. The bond has 7 years to maturity.
You buy a $1,000 par value bond with a 7.5% coupon rate today for a price of $874.95. The bond has 7 years to maturity. You sell the bond at the end of Year 3. The bonds yield to maturity is 6% at the time of the sale. What is your annual realized yield over the 3-year holding period for this investment if you reinvested the interest payments at 6% each year?
11.23% | ||
12.76% | ||
13.43% | ||
13.84% |
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