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Question 23 Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 5.00% Face Value = $1,000 Annual Coupons

Question 23

Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 5.00% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate 3.50% Immediately after you buy the bond the interest rate changes to 3.00% What is the "reinvestment" effect in year 4 ?

Group of answer choices

$1.57

$1.61

-$1.61

-$1.57

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