Somchai has an investment horizon of 3 years and wants to invest in a bond which...
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Somchai has an investment horizon of 3 years and wants to invest in a bond which has the following characteristics: it has an annual coupon rate of 7%, it is currently selling for C1,388.11, it has a face value of €1,000 and has 5 years maturity. Coupons are paid every six months. Somchai knows that they will be able to reinvest coupons at a reinvestment rate of 6% and, when the investment horizon is reached, they will be able to resell the bond to yield 7% per annum. What is the total future value of their investment to the nearest cent? Somchai has an investment horizon of 3 years and wants to invest in a bond which has the following characteristics: it has an annual coupon rate of 7%, it is currently selling for C1,388.11, it has a face value of €1,000 and has 5 years maturity. Coupons are paid every six months. Somchai knows that they will be able to reinvest coupons at a reinvestment rate of 6% and, when the investment horizon is reached, they will be able to resell the bond to yield 7% per annum. What is the total future value of their investment to the nearest cent?
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Semiannual coupon 0072CL1000 CL35 Number of coupons Somchai wil... View the full answer
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