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# 1. Bill buys a 12-year bond with a face value of $1000 and an annual coupon rate of 6%. All coupons are paid
# 1. Bill buys a 12-year bond with a face value of $1000 and an annual coupon rate of 6%. All coupons are paid annually and the first coupon is received in year one. Bill pays $1030 for the bond. As soon as the coupons are received Bill invests them in a fund earning an effective annual rate of 6.5%. What is the yield on Bill's total investment?
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Derivatives Markets
Authors: Rober L. Macdonald
4th edition
321543084, 978-0321543080
