Question
Your client bought a $1000 face-value bond with 20-years remaining to maturity for $981. The bond pays a semi-annual coupon at 9% APR compounded semi-annually.
Your client bought a $1000 face-value bond with 20-years remaining to maturity for $981. The bond pays a semi-annual coupon at 9% APR compounded semi-annually. However, 3 years later (just after receiving his 6th semi-annual coupon payment), he sold the bond for $854. What was his realized yield (or realized return) stated as an APR with semi-annual compounding?
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Principles Of Managerial Finance Brief
Authors: Chad J. Zutter, Scott B. Smart
8th Global Edition
1292267143, 978-1292267142
