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Realized compound yield on bond

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A bond has a par value of $1,000, time to maturity of 20 years, a coupon rate of 10% with interest paid annually, a current price of $850, and a yield to maturity of 12%. Intuitively and without using calculations, if interest payments are reinvested at 10%, Will the realized compound yield on this bond be lower or higher than 10%, and why?

Reference no: EM132516358

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