A U.S. Government T-bond matures in 12 years and has a face value of $100. The...
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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).
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Related Book For
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin
Posted Date:
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