Suppose an investor can purchase a 10-year 4 coupon bond, Ask an Expert

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Suppose an investor can purchase a 10-year, 4% coupon bond that pays interest semiannually and the price of this bond is $100. The yield to maturity for this bond is 4% on bond-equivalent basis. Assume the investor can reinvest the coupon payments at 5% compounded semiannually.

a. Compute the following for this bond:

total coupon interest =

total reinvestment income=

total dollar return=

b. What is the total return on a bond equivalent basis if it held to maturity?

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Financial Management, Finance

Category:- Financial Management
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