In this example I’m not quite sure about the different yields they are calculating or why they are calculating them. From the calculations is appears as though the difference between the Horizon yield and EAR due to the different reinvestment rate of the coupons, but at the same Horizon Yield and reinvestment rate there is a vastly different EAR. The calculation also confuses me because it appears as though they are double counting the coupons. They use them to calculate the price at the end of the 1st year and then add them using the 7% rate. Does anyone understand the calculation?