Please explain. A 3 year, 6% coupon, semi-annual note has a YTM of 5.5%. If an investor holds this note to maturity and earns a 4.5% return on reinvested income, his realized yield on the note is cloest to: A. 5.46% B. 5.57% C. 5.68% D. 5.79%
no calculation, A
agree… to realize the YTM of 5.5%, the reinvestment return rate has to be 5.5%
where is this, in FI or quant? thanks ?
Its in FI. “No calculation” - So how did you do that jo_l?
your YTM if you held woudl have been 5.5 but your reinvestment rate is not same as YTM. hence your YTM gotte be lower than your current YTM.