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You purchased a default-free 5-year semi-annually paid coupon bond 1 year ago. Its coupon interest rate was 6%, and its par value was $1,000. At
You purchased a default-free 5-year semi-annually paid coupon bond 1 year ago. Its coupon interest rate was 6%, and its par value was $1,000. At the time you purchased the bond, the yield to maturity was 4%. If you have reinvested the interest payments with a rate of 4% and you sold the bond with the bond's yield to maturity changed to 3%, what is your rate of return on holding the bond over the past 1 year?
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