You bought a bond with the following characteristics:
$1,000 par value 11% coupon
Semiannual payments 36 years to maturity
Bond was priced to yield 12%.
For the first three years after you bought the bond interest rates remained constant at 6%. Then interest rates dropped to 5.4% and remained at that rate for five years. Then rates dropped further to 4.8% and remained at that rate for two more years. Rates dropped even lower to 4% and remained at that rate until the bond matured. Assume that all coupon interest payments were reinvested at the prevailing markets rate(s). Calculate the realized yield of this investment.