Consider an 8% coupon bond selling for $953.10 with three years until maturity making annualcoupon payments. The interest rates in the next three years will be, with certainty, r1 = 8%, r2 =10%, and r3 = 12%. Calculate the bond’s (a) yield to maturity and (b) realized compound yield.

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Consider an 8% coupon bond selling for $953.10 with three years until maturity making annualcoupon payments. The interest rates in the next three years will be, with certainty, r1 = 8%, r2 =10%, and r3 = 12%. Calculate the bond’s (a) yield to maturity and (b) realized compound yield.

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