Referring to the bond described in Problem 8, assume that the bond 's interest payments were reinvested at a rate of 5 per annum a What would be the future value of the reinvested coupons (there are 10 years of coupons received between 2005 and 2014) b Given the purchase price of $850, the maturity value of $1,000 added to the future value of the reinvested coupons, what was the bond 's average annual compound return c Repeat this calculation assuming bond interest was reinvested at 15 per annum What was the bond 's average annual compound return d What do you conclude from these two calculations

Question: Referring to the bond described in Problem 8, assume that the bond's interest payments were reinvested at a rate of 5% per annum. a. What

Referring to the bond described in Problem 8, assume that the bond's interest payments were reinvested at a rate of 5% per annum.
a. What would be the of the reinvested coupons (there are 10 years of coupons received between 2005 and 2014).
b. Given the purchase price of $850, the value of $1,000 added to the of the reinvested coupons, what was the bond's average annual compound return?
c. Repeat this calculation assuming bond interest was reinvested at 15% per annum. What was the bond's average annual compound return?
d. What do you conclude from these two calculations?

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