Question
Assume that a portfolio manager purchases $100,000,000 of a 30-year bond with a coupon of 3.5% paid semi-annually. The first coupon payment is 6 months
Assume that a portfolio manager purchases $100,000,000 of a 30-year bond with a coupon of 3.5% paid semi-annually. The first coupon payment is 6 months from the settlement date. How much will the portfolio manager have if the bond is held to maturity and coupon payments can be reinvested at 2.25% per annum, compounded semi-annually? If the purchase price is 97.5, what is the total rate of return?
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
10th Edition
538482109, 1133711774, 538482389, 9780538482103, 9781133711773, 978-0538482387
