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Suppose an investor can purchase a 5-year 8% coupon bond with a par value of $100 that pays interest semi-annually. The yield to maturity for

Suppose an investor can purchase a 5-year 8% coupon bond with a par value of $100 that pays interest semi-annually. The yield to maturity for this bond is 9% on a bond-equivalent basis. What is the total future dollars and the total dollar return that should be generated from this bond if it is to yield 9%?


b. What is the coupon interest, capital gain/loss and reinvestment income associated with this bond? Assume that the reinvestment rate is equal to the yield to maturity.

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