Realized Compound Yield
§The Yield-to-Maturity measure implicitly assumes that all coupons can be invested at the internal rate of return.
§An alternative ex-post yield measure can be computed that takes the actual reinvestment rates.
100
1100
Time   0
1
2
1100
Reinvested at 8%       108
1208
Realized compound yield = (1208/1000)0.5 - 1 = 9.91%
-1000
Yield to maturity = 10%