Question
Eighteen years ago (in 2004) Kokopelli Inc. issued bonds with a 25-year maturity and a semi-annual coupon rate of 4%. Over the subsequent 6 years
Eighteen years ago (in 2004) Kokopelli Inc. issued bonds with a 25-year maturity and a semi-annual coupon rate of 4%. Over the subsequent 6 years market yields continuously rose, so that by 2010 the YTM for such bonds was at 6%. That year, Shairy bought one of these bonds, and she held it for four full years. She placed all received coupon payments into her bank account, which earns 4% compounded semi-annually. She did the same with the proceeds from the sale of the bond. What should the balance in her bank account be by the end of this year? Par value = $1000
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