Three years ago, Joe bought a 5-year bond, with a 10% coupon, for $1000 and to...

 

Transcribed Image Text:

Three years ago, Joe bought a 5-year bond, with a 10% coupon, for $1000 and to be paid semiannually. Currently, with interest rates having risen sharply, the bond is selling for $800 and you decide to sell it off. If you had re-invested the semi-annual coupons as you received them, what would your realized yield be over the 3-year holding period? Three years ago, Joe bought a 5-year bond, with a 10% coupon, for $1000 and to be paid semiannually. Currently, with interest rates having risen sharply, the bond is selling for $800 and you decide to sell it off. If you had re-invested the semi-annual coupons as you received them, what would your realized yield be over the 3-year holding period?