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You buy a 40-year bond that pays a 10% (annual) coupon. The price right now is $1,000 (which means that the yield when you buy
You buy a 40-year bond that pays a 10% (annual) coupon. The price right now is $1,000 (which means that the yield when you buy it is 10%). You hold onto the bond for 20 years, reinvesting the coupons at 11%. At the end of 20 years, you sell the bond, when the market yield for a 20-year bond of this risk class is 8%. What was your realized, annualized return on this investment
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