Scribd Logo
Upload

Welcome to Scribd!

  • Lecture 1 (1) .39

    Uploaded by

    kanye
    4 views1 page
    If interest payments can be reinvested at the yield to maturity rate, the cash flows from interest payments and principal repayment at maturity will be equal. The realized compound yield is useful when the reinvestment rate differs from the yield to maturity, as it accounts for collecting all cash flows at maturity and solving for the annualized return by dividing the total cash flows by the bond price.

    Original Description:

    Lecture 1(1).39

    Original Title

    Lecture 1(1).39

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    If interest payments can be reinvested at the yield to maturity rate, the cash flows from interest payments and principal repayment at maturity will be equal. The realized compound yield is useful when the reinvestment rate differs from the yield to maturity, as it accounts for collecting all cash flows at maturity and solving for the annualized return by dividing the total cash flows by the bond price.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    4 views1 page

    Lecture 1 (1) .39

    Uploaded by

    kanye
    If interest payments can be reinvested at the yield to maturity rate, the cash flows from interest payments and principal repayment at maturity will be equal. The realized compound yield is useful when the reinvestment rate differs from the yield to maturity, as it accounts for collecting all cash flows at maturity and solving for the annualized return by dividing the total cash flows by the bond price.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 1

    Realized compound yield

    If the coupon can be reinvested at an interest


    rate that equals the YTM, the time two cash
    flows will be equal
    The realized compound yield is a useful
    concept when the reinvestment rate is
    different from the YTM
    Collect all cash flows at the maturity of the bond
    Solve for the annualized return by dividing by the
    price

    You might also like