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Anthony Walker bought 10-year, 13.1 percent coupon bonds issued by the U.S. Treasury three years ago...

Anthony Walker bought 10-year, 13.1 percent coupon bonds issued by the U.S. Treasury three years ago at $904.39. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $842.20, what is his realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.)

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Answer #1

Using Excel
=RATE(3,13.1%*1000,-904.39,842.20)
=12.4560%

Realized yield on the bonds=12.4560%

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