What is the total return on bond equivalent basis

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Reference no: EM131055159

Suppose an investor can purchase a 10-year, 4% coupon bond that pays interest semiannually and the price of this bond is $100. The yield to maturity for this bond is 4% on bond-equivalent basis. Assume the investor can reinvest the coupon payments at 5% compounded semiannually.

a. Compute the following for this bond:

total coupon interest =

total reinvestment income=

total dollar return=

b. What is the total return on a bond equivalent basis if it held to maturity?

Reference no: EM131055159

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