Assume That You Purchase a 3-Year $1,000 Par Value Bond,with

Multiple Choice

Assume that you purchase a 3-year $1,000 par value bond,with a 8% coupon,and a yield of 10%.After you purchase the bond,one-year interest rates are as follow,year 1 = 10%,year 2 = 8%,year 3 = 6% (these are the reinvestment rates) .Calculate the realized horizon yield if you hold the bond to maturity.Interest is paid annually.

A) 8.37%
B) 7.28%
C) 9.76%
D) 10.67%
E) 14.0%