justinmeyers45
Apr 16, 2012, 07:40 PM
John Smith bought a 10 year coupon bond with a $100 annual coupon and face value of $1000 in 2009. The yield on the bond was 5.5%. Today he sold the bond in the market and this bond was sold to yield 3.95% to the new buyer. If Smith reinvested the coupons at a rate of 3.95%, what was the actual return to Smith over the 3 years?