Question

You have purchased a bond with 23 year maturity, 2% coupon rate, $1000 face value, and semi-annual payments for $834.72

Two years later, when the YTM=2.5%, you sell the bond.

What was your average annual realized yield on the bond, if you were able to reinvest coupons at 3%? [Provide your answer in percent rounded to two decimals, omitting the % sign.]

Answer 1

=((Future Value)/(Present Value))^(1/t)-1
=((2%*1000/3%*(1.015^46-1)+1000)/(834.72))^(1/23)-1
=3.02%