Do a Horizon Analysis by computing the four components of bond returns for a 4% coupon (paying semi-annual payments) bond that has 10 years to maturity, if the current YTM is 8% and the expected YTM in 9 years is 7.5%. The reinvestment rate on the coupons will be 3% PER HALF YEAR. a) Calculate each of the four component effect return values (Time, Yield, Coupon, Interest earned on Coupon Interest), AND b) Find the average annual overall return

years to maturity = yield to maturity 10 9 .... 5 ... 1 0 7% 7.5% 8% 8.5% 78.68 80.22 87.53 97.15 100 75.68 77.39 85.63 96.69 100 72.8274.68 83.78 96.23 100 70.09 72.09 081.98 0 95.77 100 years to maturity = yield to maturity 10 9 .... 5 ... 1 0 7% 7.5% 8% 8.5% 78.68 80.22 87.53 97.15 100 75.68 77.39 85.63 96.69 100 72.8274.68 83.78 96.23 100 70.09 72.09 081.98 0 95.77 100