Question
Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you
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 = 3.47%
Immediately after you buy the bond the interest rate changes to 7.97%
What is the "reinvestment" effect in year 3 ?
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
13th edition
1285198840, 978-1285198842
