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Five years ago, you bought a 5 year bond with a coupon rate of 20%, annual coupons, a face value of 1000, at a yield
Five years ago, you bought a 5 year bond with a coupon rate of 20%, annual coupons, a face value of 1000, at a yield to maturity of 15%. (a) What was the price of the bond when you purchased it? (b) When you received the coupons, you did not need the money immediately and you reinvested the coupons you received at an annual rate of 8% until today. How much money will you have today? (c) What rate of return did you receive on your investment across the five years?
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