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   I bought a 7% coupon bond at par 12 years ago. During those years I...

   I bought a 7% coupon bond at par 12 years ago. During those years I was able to reinvent my interest payments at 9%. The bond just matured. What was my realized YTM on the bond? What was my expected YTM when I purchased the bond? If I had just saved my $70 payments in a cookie jar, what would my realized   YTM be?

Solutions

Expert Solution

Coupons value in 12 years is $1,409.85

i)

Hence, Yield to maturity is 7.61%

ii) If coupon payments are saved in cookie jar:

Yield to maturity will be 7%

jeff jeffy answered 1 year ago
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