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Assumption:
Reinvestment rate is 65% of YTM, applicable to all bonds
Price
Face Value
Coupon
Time to Maturity
Yield to Maturity
109
100
5.36%
3
9.63%
86
2.52%
4
11.37%
108
2.64%
7
9.77%
How would I value this bond portfolio?
My approach:
Get the PV of all three bonds then sum them up. However, I am not clear on what to do with the reinvestment rate.
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