Question
9. (6 pts) An investor purchases a just issued 30-year, 10.000% semi-annual coupon bond at 107.956 percent of par value and holds it to maturity.
9. (6 pts) An investor purchases a just issued 30-year, 10.000% semi-annual coupon bond at 107.956 percent of par value and holds it to maturity. The bonds yield to maturity is 9.214% at time of sale, and rises to 10.100% immediately after the purchase but before the first coupon is received. All coupons are reinvested to maturity at the new yield to maturity. Show the sources of return below. (a) Total coupon payments: (b) PAR value at maturity: (c) Reinvestment income from coupons: (d) Total value at maturity: (e) Realized rate of return (horizon yield) at maturity:
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