You are considering purchase of a 10% coupon interest, 10-year bond with a par value of $1,000.
One year from now, you expect that the yield to maturity for this bond to be 6%. Use Excel to compute the realized compound yield during the year while assuming a reinvestment rate of 5% and semi-annual interest payments.
Then identify and comment on the significance of each of the components of the calculated realized compound yield from results.