Problem
Exactly 26 years ago you purchased a newly-issued 30-year bond, annual 6.0% coupon, par $1000, when market rates were 5.0%. Exactly 10 years ago, rates suddenly increased to 11.0%. Today, the central bank announced a rate change, which has caused rates to dramatically decrease to 3%, so you sell.
What is your realized yield over your holding period of the bond?
There are 4 steps. Enter your answers for each below:
• What is the price at purchase?
• What is the price when you sold the bond?
• Total accumulated value when you sold the bond (including the sale of the bond) is.
• Realized annual rate of return is:.