A U.S. Government T-bond matures in 12 years and has a face value of $100. The bond has a coupon rate of 3.2% paid semi-annually (the next coupon is due in 6 months). The yield on the bond is 5.9%. If coupons are re-invested at 4.2% per annum, then how much interest is earned on re-invested coupons over the life of the bond? Calculate the interest as a percentage of the total cash flows received at maturity by the bondholder. Express your answer in percentage form rounded to the nearest percerit (i.e. no decimals).

A U.S. Government T-bond matures in 12 years and has a face value of $100. The bond has a coupon rate of 3.2% paid semi-annually (the next coupon is due in 6 months). The yield on the bond is 5.9%. If coupons are re-invested at 4.2% per annum, then how much interest is earned on re-invested coupons over the life of the bond? Calculate the interest as a percentage of the total cash flows received at maturity by the bondholder. Express your answer in percentage form rounded to the nearest percerit (i.e. no decimals).

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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