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An investor purchases a just issued 30-year, 10.000% semi-annual coupon bond at 104.079 percent of par value and sells it after 10 years. The bonds
An investor purchases a just issued 30-year, 10.000% semi-annual coupon bond at 104.079 percent of par value and sells it after 10 years. The bonds yield to maturity is 9.584%, and assume it is constant through the bonds life. All coupons are reinvested to maturity at the yield to maturity. Show the sources of return below.
(a) Total coupon payments:
(b) Reinvestment income from coupons:
(c) Sale price of the bond after 10 years:
(d) Total value after 10 years:
(e) Realized rate of return (horizon yield) after 10 years:
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