Question
Future Value of re-invested payments An investor just purchased an annual 8 year bond that pays $40 each year for 8 years, and $1,000 in
Future Value of re-invested payments
An investor just purchased an annual 8 year bond that pays $40 each year for 8 years, and $1,000 in the final year. The investor believes she can reinvest the coupon payments each year at a $6.75%, interest rate.
- If the yield to maturity on the bond is $4%, then what is the price of the bond?
- How much money will the investor have in 8 years, if he reinvests the coupon payments at the $6.75% interest rate?
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Handbook On Corporate Governance In Financial Institutions
Authors: Christine A. Mallin
1st Edition
1784711780, 978-1784711788
