Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.10 percent. If you sell the bond after 7 years when the yield to maturity is 7.10 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) FV Answer is complete but not entirely correct. 483.26
Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.10 percent. If you sell the bond after 7 years when the yield to maturity is 7.10 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) FV Answer is complete but not entirely correct. 483.26
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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please help with the FV value that i got wrong
Transcribed Image Text:Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.10 percent. If you sell the bond after 7 years when the yield to maturity is 7.10 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
❌ Answer is complete but not entirely correct.
| FV | $483.26 ❌ |
|-------------------|-----------|
| Selling price | $959.11 ✅ |
| Realized yield | 5.37% ✅ |
In this table:
- "FV" refers to the future value calculation, which is incorrect.
- "Selling price" refers to the price you obtain when selling the bond, which is correctly calculated as $959.11.
- "Realized yield" represents the yield achieved, calculated accurately at 5.37%.
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