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You have purchased a bond 30 months ago with par=$1000, semi-annual coupons of 40 (=PMT) and YTM of 10%. If you sell the...

You have purchased a bond 30 months ago with par=$1000, semi-annual coupons of 40 (=PMT) and YTM of 10%.

If you sell the bond today, what is the value of coupons you have received while holding the bond (i.e.FVcoupons) today, given a coupon reinvestment rate of 2% over the past 30 months?

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Answer #1

Calculating Future Value to today of Coupon Payments,

Using TVM Calculation,

FV = [PV = 0, PMT = 40, N = 30, I = 0.02/30]

FV = $1,229.46

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