Question
1.Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you
1.Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 3.85% Immediately after you buy the bond the interest rate changes to 7.89% What is the "reinvestment" effect in year 3 ?
2.
Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 4.54% Immediately after you buy the bond the interest rate changes to 5.81% What is the "reinvestment" effect in year 3 ?
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Finance Introduction To Institutions Investments And Management
Authors: Ronald W. Melicher, Edgar A. Norton
12th Edition
0471675792, 9780471675792
