Author Question: Consider a 35 year coupon bond with a face value of $1,000 that pays $80 annual coupons (beginning ... (Read 130 times)

leo leo · **on:** Apr 25, 2021

Question 1

Consider a 35 year coupon bond that pays $80 annual coupons (beginning one year from today). What is the future value of the coupons at maturity if you can invest them at 8%?
◦ $13,785.34
◦ $16,214.36
◦ $8,496.24
◦ $14,100.34
◦ $3,495.30

Question 2

Consider a 35 year coupon bond with a face value of $1,000 that pays $80 annual coupons (beginning one year from today). Assume that you invest each coupon in a bank that pays 8% interest. By the maturity date of the bond, how much interest have you earned by investing the coupons? Express your answer as a proportion of all of the money that you have received from owning the bond by the maturity date.
◦ 54%
◦ 59%
◦ 64%
◦ 69%
◦ 74%

jomama · **Reply #1 on:** Apr 25, 2021

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