Three years ago, you purchased a bond for $974.69. The bond had three years to maturity,...

 

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Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8%, paid annually, and a face value of $1,000. Each year, you reinvested all coupon interest at the prevailing reinvestment rate shown in the table below. Today is the bond's maturity date. What is your realized compounded yield on the bond? (12 pts) Time 0 (purchase date) 1 2 3 (maturity date) Prevailing Reinvestment Rate 6% 7.2% 9.4 8.2% Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8%, paid annually, and a face value of $1,000. Each year, you reinvested all coupon interest at the prevailing reinvestment rate shown in the table below. Today is the bond's maturity date. What is your realized compounded yield on the bond? (12 pts) Time 0 (purchase date) 1 2 3 (maturity date) Prevailing Reinvestment Rate 6% 7.2% 9.4 8.2%

Answer rating: 100% (QA)

To calculate the realized compounded yield on the bond we need to determine the future value of all ... View the full answer