Three years ago you purchased a bond for $974.69.The bond had three years to maturity, a coupon rate of 8%, paid annually, and a face value of $1,000.Each year you reinvested all coupon interest at the prevailing reinvestment rate shown in the table below.Today is the bond's maturity date.What is your realized compound yield on the bond

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The investment grows to a total future value of $80 × (1.072) × (1.094) + $80 × (1.094) + $1,080 = $1,261.34 over the three-year period.The realized compound yield is the yield that will compound the original investment to yield the same future value: $974.69 × (1 + rcy)³ = $1,261.34, (1 + rcy)³ = 1.29409, 1 + rcy = 1.0897, rcy = 8.97%.

Three Years Ago You Purchased a Bond for $974