Assume that a portfolio manager purchases $100,000,000 of a 30-year bond with a coupon of 3.5% paid semi-annually. The first coupon payment is 6 months from the settlement date. How much will the portfolio manager have if the bond is held to maturity and coupon payments can be reinvested at 2.25% per annum, compounded semi-annually? If the purchase price is 97.5, what is the total rate of return?

Answer rating: 100% (QA)

Rate interest rate per period of 6 months 225 2 1125 PMT periodic ... View the full answer