Calculate the realized yield of investment

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You bought a bond with the following characteristics: $1,000 par value 5.5% coupon Semiannual payments 18 years to maturity Bond was priced to yield 6%. 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.

Reference no: EM131179039

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