Company paid coupons and principal as scheduled

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Reference no: EM131983142

ShuMae purchased a bond that offered an YTM of 10%. The bond had 5 years to maturity and the company paid coupons and the principal as scheduled during the 5 years. ShuMae, a graduate of NYU saved these coupons in her saving account that paid 5% annual rate. ShuMae is happy that although interest rates had dropped considerably in the 5 years, she was still able to earn 10% average return on her bond investment. How would you respond to ShuMae?

Reference no: EM131983142

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