One of the EOD question ask for Effective return on 11% bond assuming its YTM changes from 11.5% to 9% in one year and coupon are reinvested at 6% (note YTM is 11.5%).
I always thought YTM assumes all coupons are reinvested at YTM rate, not sure why I had this notation in my mind?
http://www.economics-finance.org/jefe/econ/ForbesHatemPaulpaper.pdf
This link goes into details on how financial journals and professor use this assumption in YTM explanation.
Any thoughts/comments or is it just me with wrong concepts in my tiny brain.