All coupons are reinvested at a nominal rate of $4\%$ convertible semiannually.

11. (8 Points) An investor borrows an amount at an annual effective interest rate of 5% and will repay all interest and principal in a lump sum at the end of 10 years. She uses tha amount borrowed to purchase a $1,000 par value 10-year bond with 8% semiannual coupons bought to yield 6% convertible semiannually. Calculate the net gain to the investor at the end of 10 years after the loan is repaid. (a) 96 (b) 101 (c) 106 (d) 111 (e) 116 11. (8 Points) An investor borrows an amount at an annual effective interest rate of 5% and will repay all interest and principal in a lump sum at the end of 10 years. She uses tha amount borrowed to purchase a $1,000 par value 10-year bond with 8% semiannual coupons bought to yield 6% convertible semiannually. Calculate the net gain to the investor at the end of 10 years after the loan is repaid. (a) 96 (b) 101 (c) 106 (d) 111 (e) 116