Question
You purchased a 20-year bond with a par value of $1,000 paying an annual coupon of $100 ($50 every six months). You planned to hold
You purchased a 20-year bond with a par value of $1,000 paying an annual coupon of $100 ($50 every six months). You planned to hold the bond for 10 years. The yield-to-maturity was 6.0 percent when you purchased this bond. Right after you purchased this bond, the yield (reinvestment rate) went up 11.0 percent (5.5 percent every 6 months), and stayed at 11.0 percent for the entire 10 year period. However, on the day you sold the bond, the yield-to-maturity dropped back to 6.0 percent. Determine your realized compouneded yield for the 10 year holding period.
Enter your answer in decimal format, to dour decimal places.
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